When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as 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.
PACCAR (PCAR)
Consensus Price Target: $124.76 (-2.3% implied return)
Founded more than a century ago, PACCAR (NASDAQ: PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.
Why Does PCAR Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 10% annually over the last two years
- Gross margin of 16.5% reflects its high production costs
- Earnings per share have contracted by 27.8% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
PACCAR is trading at $127.69 per share, or 22.5x forward P/E. To fully understand why you should be careful with PCAR, check out our full research report (it’s free).
TFS Financial (TFSL)
Consensus Price Target: $14.50 (-3.6% implied return)
Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ: TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.
Why Do We Avoid TFSL?
- Annual net interest income growth of 3.9% over the last five years was below our standards for the banking sector
- Inferior net interest margin of 1.7% means it must compensate for lower profitability through increased loan originations
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 2% annually
TFS Financial’s stock price of $15.05 implies a valuation ratio of 2.2x forward P/B. Read our free research report to see why you should think twice about including TFSL in your portfolio.
Phibro Animal Health (PAHC)
Consensus Price Target: $48.50 (-8.1% implied return)
With a portfolio of approximately 800 product lines serving farmers and veterinarians in 90 countries, Phibro Animal Health (NASDAQ: PAHC) develops, manufactures, and markets health products for livestock and companion animals, including antibacterials, vaccines, nutritional supplements, and mineral additives.
Why Are We Wary of PAHC?
- Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its two-year trend
- Low free cash flow margin of 1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Decreasing returns on capital reveal struggles to replicate the success of earlier investments
Phibro Animal Health trades at a stock price of $52.75. Dive into our free research report to see why there are better opportunities than PAHC.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
