When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.
Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in - to help you find attractive investment candidates backed by unbiased research. That said, here is one stock where you should be greedy instead of fearful and two where the skepticism is well-placed.
Two Stocks to Sell:
Best Buy (BBY)
Consensus Price Target: $80.71 (-1.8% implied return)
With humble beginnings as a stereo equipment seller, Best Buy (NYSE:BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Does BBY Give Us Pause?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 22.4% that must be offset through higher volumes
- Operating margin of 3.1% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
Best Buy’s stock price of $82.18 implies a valuation ratio of 12.8x forward P/E. Check out our free in-depth research report to learn more about why BBY doesn’t pass our bar.
Proto Labs (PRLB)
Consensus Price Target: $50 (-8% implied return)
Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE:PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.
Why Do We Pass on PRLB?
- 2.4% annual revenue growth over the last two years was slower than its industrials peers
- Efficiency has decreased over the last five years as its operating margin fell by 7.6 percentage points
- Earnings per share have dipped by 9.3% annually over the past five years, which is concerning because stock prices follow EPS over the long term
At $54.35 per share, Proto Labs trades at 35.5x forward P/E. If you’re considering PRLB for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
AbbVie (ABBV)
Consensus Price Target: $237.48 (4.4% implied return)
Born from a 2013 spinoff of Abbott Laboratories' pharmaceutical business, AbbVie (NYSE:ABBV) is a biopharmaceutical company that develops and markets medications for autoimmune diseases, cancer, neurological disorders, and other complex health conditions.
Why Do We Like ABBV?
- Massive revenue base of $58.33 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- ABBV is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
AbbVie is trading at $227.50 per share, or 19.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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