Image source: Fitbit. 

One of this year's worst-performing stocks gave investors a break last week. Shares of Fitbit (NYSE:FIT) rose 13% higher last week, closing higher every single trading day. 

The tone was set from the first trading day of the week. The leading maker of fitness trackers filed a counterclaim on Monday against Valencell, a company that had accused Fitbit of patent infringement back in January. Fitbit's legal response denies any infringement based on its heart rate monitoring technology, and it also attempts to turn the tables by accusing Valencell of duplicating its sensor technology. 

It's obviously too early to gauge Fitbit's prospects in the legal scuffle, but just the fact that it's fighting back is encouraging. 

Fitbit was brought up on CNBC's Mad Money later that day. Jim Cramer admitted that he's been wrong with his bullish call on the pummeled stock in recent months, but concluded that he still believes in the stock's long-term prospects. It was also offered up as an opportunistic trade by CNBC's Fast Money Halftime Report panel. 

The other major development was Piper Jaffray putting out its sixth semiannual women's survey. The results when it came to the fitness brand category were mixed. On the bullish front, the analyst firm's survey showed fitness bracelet ownership rising to 21%, up from 18% just six months earlier. Fitbit also padded its lead as the top dog in this niche with mindshare rising to 77% from 68% in the fall survey. Its nearest rival -- if you can even call it that -- commanded just 5% of the mindshare. However, the survey also indicated that the intent to buy any fitness band in the next six months dipped from 19% to 15% in the spring survey.   

That's something to watch, of course. Trends come and go, and it won't be easy to regain momentum once it's squandered. However, with some companies now starting to subsidize the purchase of Fitbit activity trackers as a way to encourage active lifestyles and lower health insurance costs, could the intent to purchase be shifting as fitness bands become corporate perks?

Fitbit's 13% pop last week is welcome, but the stock still has a long way to go if it wants to take out its earlier highs. It's trading 72% below its summertime highs shortly after last year's IPO, and remains a broken IPO until it breaks out of the teens after going public at $20 nine months ago. Fitbit stock is also still one of this year's biggest losers, shedding 51% of its value year to date.

It's been a rough year for Fitbit. It may have had a blowout holiday quarter -- selling 8.2 million connected health and fitness devices with revenue soaring 92% -- but guidance calling for sharply decelerating top-line growth and shrinking margins through 2016 as it invests in new product offerings and develops its digital health strategy isn't helping. 

The unfavorable catalysts appear to be more than offset by the stock's compelling valuation here. Fitbit stock is trading for just 13 times this year's projected profit and just 10 times next year's target. If it's able overcome the margin crunch and the onslaught of new entrants in its niche -- and let's say that its new Blaze smartwatch isn't the dud that some initial reviews play it out to be -- the stock that has been one of this year's biggest losers can turn things around.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.