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.
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. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.
Two Stocks to Sell:
J. M. Smucker (SJM)
Consensus Price Target: $121.14 (5.4% implied return)
Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Does SJM Give Us Pause?
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Sales trends were unexciting over the last three years as its 3.7% annual growth was below the typical consumer staples company
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Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
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Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
At $114.95 per share, J. M. Smucker trades at 11.3x forward P/E. Read our free research report to see why you should think twice about including SJM in your portfolio, it’s free.
Labcorp (LH)
Consensus Price Target: $273.34 (9% implied return)
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE:LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Why Are We Wary of LH?
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Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
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Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 13.3 percentage points
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Diminishing returns on capital suggest its earlier profit pools are drying up
Labcorp is trading at $250.80 per share, or 15.2x forward P/E. Check out our free in-depth research report to learn more about why LH doesn’t pass our bar.
One Stock to Watch:
Procter & Gamble (PG)
Consensus Price Target: $171.51 (3.6% implied return)
Founded by candle maker William Procter and soap maker James Gamble, Proctor & Gamble (NYSE:PG) is a consumer products behemoth whose product portfolio spans everything from facial tissues to laundry detergent to feminine care to men’s grooming.