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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock poised to prove Wall Street wrong and two where the outlook is warranted.
Two Stocks to Sell:
Stitch Fix (SFIX)
Consensus Price Target: $4.63 (-15.8% implied return)
One of the original subscription box companies, Stitch Fix (NASDAQ: SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.
Why Do We Think SFIX Will Underperform?
- Demand for its offerings was relatively low as its number of active clients has underwhelmed
- Persistent operating margin losses suggest the business manages its expenses poorly
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Stitch Fix’s stock price of $5.49 implies a valuation ratio of 15.3x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SFIX.
Hercules Capital (HTGC)
Consensus Price Target: $21.22 (9.4% implied return)
Named after the mythological hero known for his strength, Hercules Capital (NYSE: HTGC) is a business development company that provides debt financing to venture capital-backed and growth-stage technology and life sciences companies.
Why Does HTGC Worry Us?
- Annual earnings per share growth of 2.1% underperformed its revenue over the last two years, showing its incremental sales were less profitable
Hercules Capital is trading at $19.40 per share, or 9.6x forward P/E. Check out our free in-depth research report to learn more about why HTGC doesn’t pass our bar.
One Stock to Buy:
Blue Bird (BLBD)
Consensus Price Target: $56.57 (-2.7% implied return)
With around a century of experience, Blue Bird (NASDAQ: BLBD) is a manufacturer of school buses and complementary parts.
Why Are We Backing BLBD?
- Annual revenue growth of 14.3% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 317% outpaced its revenue gains
- Rising returns on capital show management is finding more attractive investment opportunities
At $58.17 per share, Blue Bird trades at 14.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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