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.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. That said, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Medifast (MED)
Consensus Price Target: $15 (4.7% implied return)
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE:MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Is MED Risky?
- Annual sales declines of 30.3% for the past three years show its products struggled to connect with the market
- Inability to adjust its cost structure while its revenue declined over the last year led to a 10.2 percentage point drop in the company’s operating margin
- Earnings per share have contracted by 27% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
Medifast’s stock price of $14.32 implies a valuation ratio of 0.4x forward price-to-sales. To fully understand why you should be careful with MED, check out our full research report (it’s free).
Insteel (IIIN)
Consensus Price Target: $39 (9.2% implied return)
Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE:IIIN) provides steel wire reinforcing products for concrete.
Why Are We Wary of IIIN?
- Sales tumbled by 7% annually over the last two years, showing market trends are working against its favor during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 19.5% annually, worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
Insteel is trading at $35.72 per share, or 14x forward P/E. Read our free research report to see why you should think twice about including IIIN in your portfolio.
TopBuild (BLD)
Consensus Price Target: $383.10 (0.3% implied return)
Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE:BLD) is a distributor and installer of insulation and other building products.
Why Is BLD Not Exciting?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 7.7% annually
At $382 per share, TopBuild trades at 18.6x forward P/E. Dive into our free research report to see why there are better opportunities than BLD.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. 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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