In This Article:
Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like 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 where Wall Street’s pessimism is creating a buying opportunity and two where the skepticism is well-placed.
Two Stocks to Sell:
Analog Devices (ADI)
Consensus Price Target: $242.32 (8.5% implied return)
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ:ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Does ADI Give Us Pause?
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Sales tumbled by 13.8% annually over the last two years, showing market trends are working against its favor during this cycle
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Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 8.1 percentage points
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Underwhelming 6.2% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
At $223.40 per share, Analog Devices trades at 29.8x forward P/E. To fully understand why you should be careful with ADI, check out our full research report (it’s free).
Robert Half (RHI)
Consensus Price Target: $49.30 (1.8% implied return)
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE:RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Do We Pass on RHI?
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Sales tumbled by 1.5% annually over the last five years, showing market trends are working against its favor during this cycle
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Sales were less profitable over the last five years as its earnings per share fell by 11.9% annually, worse than its revenue declines
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Waning returns on capital imply its previous profit engines are losing steam
Robert Half’s stock price of $48.43 implies a valuation ratio of 17.9x forward P/E. Dive into our free research report to see why there are better opportunities than RHI.
One Stock to Buy:
Badger Meter (BMI)
Consensus Price Target: $230.16 (-5.3% implied return)