In This Article:
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.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. Keeping that in mind, here is one stock poised to prove Wall Street wrong and two facing legitimate challenges.
Two Stocks to Sell:
REV Group (REVG)
Consensus Price Target: $34 (4% implied return)
Offering the first full-electric North American fire truck, REV (NYSE:REVG) manufactures and sells specialty vehicles.
Why Are We Hesitant About REVG?
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Sales stagnated over the last five years and signal the need for new growth strategies
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Gross margin of 11.7% reflects its high production costs
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Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability
REV Group is trading at $32.70 per share, or 13x forward price-to-earnings. If you’re considering REVG for your portfolio, see our FREE research report to learn more.
AT&T (T)
Consensus Price Target: $29.26 (6.2% implied return)
Founded by Alexander Graham Bell, AT&T (NYSE:T) is a multinational telecomm conglomerate providing a range of communications and internet services.
Why Do We Pass on T?
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Sales tumbled by 7.3% annually over the last five years, showing consumer trends are working against its favor
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Sales were less profitable over the last five years as its earnings per share fell by 10.9% annually, worse than its revenue declines
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Low returns on capital reflect management’s struggle to allocate funds effectively
AT&T’s stock price of $27.56 implies a valuation ratio of 13.3x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than T.
One Stock to Watch:
Waste Connections (WCN)
Consensus Price Target: $207.94 (5.2% implied return)
Operating a network of municipal solid waste landfills in the U.S. and Canada, Waste Connections (NYSE:WCN) is North America's third-largest waste management company providing collection, disposal, and recycling services.
Why Do We Watch WCN?
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Annual revenue growth of 10.5% over the last five years was superb and indicates its market share increased during this cycle
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Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
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WCN is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders