Rock-bottom prices don't always mean rock-bottom businesses. The stocks we're examining today have all touched their 52-week lows, creating a classic investor's dilemma: bargain opportunity or value trap?

While market timing can be an extremely profitable strategy, it has burned many investors and requires rigorous analysis - something we specialize in at StockStory. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Varonis (VRNS)

One-Month Return: +1.3%

Founded by a duo of former Israeli Defense Forces cyber warfare engineers, Varonis (NASDAQ:VRNS) offers software-as-service that helps customers protect data from cyber threats and gain visibility into how enterprise data is being used.

Why Are We Wary of VRNS?

1. 12.2% annual revenue growth over the last three years was slower than its software peers

2. Historical operating losses point to an inefficient cost structure

3. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $41.98 per share, Varonis trades at 7.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than VRNS .

MSC Industrial (MSM)

One-Month Return: +1%

Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE:MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors

Why Do We Pass on MSM?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth

2. Estimated sales for the next 12 months are flat and imply a softer demand environment

3. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 4.5% annually

MSC Industrial’s stock price of $78.24 implies a valuation ratio of 20.3x forward price-to-earnings. If you’re considering MSM for your portfolio, see our FREE research report to learn more .

CDW (CDW)

One-Month Return: -11%

Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ:CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.

Why Should You Dump CDW?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 6% annually over the last two years

2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.7%

3. Earnings per share have contracted by 1.4% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance