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. That said, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two facing legitimate challenges.
Two Stocks to Sell:
Etsy (ETSY)
Consensus Price Target: $66.27 (-6.3% implied return)
Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NASDAQ: ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.
Why Are We Wary of ETSY?
- Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its active buyers were flat over the last two years
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Earnings per share were flat over the last three years while its revenue grew, showing its incremental sales were less profitable
At $70.74 per share, Etsy trades at 11.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than ETSY.
Fastenal (FAST)
Consensus Price Target: $43.95 (3.7% implied return)
Founded in 1967, Fastenal (NASDAQ: FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Why Are We Cautious About FAST?
- Muted 4.8% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Incremental sales over the last two years were less profitable as its 3.7% annual earnings per share growth lagged its revenue gains
- Free cash flow margin dropped by 1.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Fastenal’s stock price of $42.38 implies a valuation ratio of 35.9x forward P/E. Read our free research report to see why you should think twice about including FAST in your portfolio.
One Stock to Buy:
Vertiv (VRT)
Consensus Price Target: $166.82 (-7.9% implied return)
Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Will VRT Beat the Market?
- Average organic revenue growth of 19.6% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Free cash flow margin expanded by 5.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are growing as management capitalizes on its market opportunities
Vertiv is trading at $181.10 per share, or 41.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. 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 Comfort Systems (+782% 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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