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 are three stocks facing legitimate challenges and some alternatives worth exploring instead.
nCino (NCNO)
Consensus Price Target: $30.33 (12.6% implied return)
Founded in 2011 in North Carolina, nCino (NASDAQ: NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service.
Why Are We Cautious About NCNO?
- Estimated sales growth of 5.9% for the next 12 months implies demand will slow from its three-year trend
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.1%
- Poor expense management has led to operating margin losses
At $26.94 per share, nCino trades at 5.5x forward price-to-sales. Check out our free in-depth research report to learn more about why NCNO doesn’t pass our bar.
BJ's (BJ)
Consensus Price Target: $121.07 (8% implied return)
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Do We Think Twice About BJ?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Gross margin of 18.3% is an output of its commoditized inventory
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
BJ's is trading at $112.15 per share, or 26.1x forward P/E. Read our free research report to see why you should think twice about including BJ in your portfolio.
AGNC Investment (AGNC)
Consensus Price Target: $9.45 (1.6% implied return)
Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ: AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.
Why Do We Pass on AGNC?
- Earnings per share fell by 24.6% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 9.5% annually over the last five years
- Underwhelming 5.2% return on equity reflects management’s difficulties in finding profitable growth opportunities
AGNC Investment’s stock price of $9.30 implies a valuation ratio of 1x forward P/B. Dive into our free research report to see why there are better opportunities than AGNC.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our 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
