I try not to buy stocks with bad momentum… but what are your thoughts?

$LRN (+0,35%) STRIDE (strong sell) 8 p/e. Down 50% last month. Bad news on the earnings report, with tech issues, lower enrollments and guidance than expected. But the stock is trading very cheap with interesting growth projected…

$SFM (+0%) SPROUTS FARMERS MARKET (strong sell) 15 p/e down 21% last month and 53% last 6 months. Slower growth than projected and headwinds with inflation and competence, but still orojecting many new openings etc in a segment that is growing.

$ATGE (-0,43%) ADTALEM GLOBAL EDUCATION (hold) 13 p/e down 36% last month. Falling following Stride’s disgrace… maybe exagerated again, also “cheap”.

$EAT (-0,37%) BRINKER INTERNATIONAL (hold) 15 p/e

down 20% last month. Growing but slowing due bad performance of Maggiano’s, while growing strong with Chilli’s… implementing changes, nice growth projected ahead, interesting price.

$ADBE (-0,68%) ADOBE (hold) 16 p/e down 35% last year and 30% last 5 years. Lower p/e I’ve seen in Adobe while growing still strong and capitalizing AI. Market is afraid of them lossing their moat to AI. Oportunity?

I did buy sprouts, and I’m tempted by the others, it’s difficult to find growing companies at low valuations. Ratings are from SA

Stride is accused by this school board of municipalities in the state of New Mexico of inflating revenues by enrolling “phantom students” in order to receive more state funding (since Stride’s revenues depend almost entirely on state governments, with reimbursements paid per student).

It is also accused of having only 1 teacher for every 200 students, of suppressing whistleblowers, and of choosing to maintain “Wall Street margins over the futures of our children.”

They also point out that student outcomes declined from a graduation rate of 54% in 2023 to just 27.67% in 2024. The court case seeks repayment of the state funds in triple.

Indeed, Stride’s margins (if we consider adjusted results, the net margin for fiscal year 2025 was 15.5%) are excessively fat for a company funded by the state to provide education mainly to disadvantaged and rural populations.

And for 2026, as seen above, analysts expect profit to be $402.2 million on sales of $2.67 billion, once again implying a net margin of around 15%.

Perhaps that will happen, but the situation seems unsustainable in the long term…

Possibly, if margins and multiples actually contract, we may once again consider Stride under $100 per share.