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 are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Campbell's (CPB)
Consensus Price Target: $34.47 (11.6% implied return)
With its iconic canned soup as its cornerstone product, Campbell's (NASDAQ:CPB) is a packaged food company with an illustrious portfolio of brands.
Why Is CPB Risky?
- Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Forecasted revenue decline of 3.1% for the upcoming 12 months implies demand will fall off a cliff
- Performance over the past three years shows its incremental sales were less profitable, as its 1.6% annual earnings per share growth trailed its revenue gains
Campbell’s stock price of $30.90 implies a valuation ratio of 12.6x forward P/E. Read our free research report to see why you should think twice about including CPB in your portfolio.
eXp World (EXPI)
Consensus Price Target: $12 (3.4% implied return)
Founded in 2009, eXp World (NASDAQ:EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Why Do We Think EXPI Will Underperform?
- Number of transactions has disappointed over the past two years, indicating weak demand for its offerings
- Operating margin of -0.5% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 12.2% annually while its revenue grew
eXp World is trading at $11.60 per share, or 32.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why EXPI doesn’t pass our bar.
Hub Group (HUBG)
Consensus Price Target: $39.31 (10.4% implied return)
Started with $10,000, Hub Group (NASDAQ:HUBG) is a provider of intermodal, truck brokerage, and logistics services, facilitating transportation solutions for businesses worldwide.
Why Should You Sell HUBG?
- Flat unit sales over the past two years imply it may need to invest in improvements to get back on track
- Sales were less profitable over the last two years as its earnings per share fell by 37.1% annually, worse than its revenue declines
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $35.62 per share, Hub Group trades at 18.5x forward P/E. To fully understand why you should be careful with HUBG, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
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