1 Unpopular Stock That Should Get More Attention and 2 We Question
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. That said, here is one stock poised to prove Wall Street wrong and two where the outlook is warranted.
Two Stocks to Sell:
Caterpillar (CAT)
Consensus Price Target: $759.48 (-5.7% implied return)
With its iconic yellow machinery working on construction sites, Caterpillar (NYSE:CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.
Why Does CAT Fall Short?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- High input costs result in an inferior gross margin of 29.2% that must be offset through higher volumes
- Earnings per share have contracted by 5.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Caterpillar is trading at $805.32 per share, or 34.6x forward P/E. Read our free research report to see why you should think twice about including CAT in your portfolio.
Bristol-Myers Squibb (BMY)
Consensus Price Target: $63.04 (6% implied return)
With roots dating back to 1887 and a transformative merger in 1989 that gave the company its current name, Bristol-Myers Squibb (NYSE:BMY) discovers, develops, and markets prescription medications for serious diseases including cancer, blood disorders, immunological conditions, and cardiovascular diseases.
Why Does BMY Give Us Pause?
- Annual sales growth of 2.6% over the last five years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 10.3 percentage points
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Bristol-Myers Squibb’s stock price of $59.45 implies a valuation ratio of 9.5x forward P/E. If you’re considering BMY for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Primoris (PRIM)
Consensus Price Target: $175.43 (6.5% implied return)
Listed on the NASDAQ in 2008, Primoris (NYSE:PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.
Why Do We Love PRIM?
- Market share has increased this cycle as its 15.1% annual revenue growth over the last two years was exceptional
- Earnings per share have massively outperformed its peers over the last two years, increasing by 40.4% annually
- Free cash flow margin increased by 6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $164.79 per share, Primoris trades at 27.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
