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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Rocket Lab (RKLB)
Consensus Price Target: $54.18 (-20.8% implied return)
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.
Why Are We Wary of RKLB?
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Rocket Lab is trading at $68.37 per share, or 47.6x forward price-to-sales. Check out our free in-depth research report to learn more about why RKLB doesn’t pass our bar.
SolarEdge (SEDG)
Consensus Price Target: $25.73 (-32.2% implied return)
Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.
Why Should You Dump SEDG?
- Demand for its offerings was relatively low as its number of megawatts shipped has underwhelmed
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
SolarEdge’s stock price of $37.95 implies a valuation ratio of 1.7x forward price-to-sales. If you’re considering SEDG for your portfolio, see our FREE research report to learn more.
CME Group (CME)
Consensus Price Target: $282.56 (5.8% implied return)
Born from the Chicago Mercantile Exchange founded in 1898 as a butter and egg trading venue, CME Group (NASDAQ: CME) operates the world's largest derivatives marketplace where traders can buy and sell futures and options contracts across interest rates, equities, currencies, commodities, and more.
Why Does CME Worry Us?
- 4.7% annual revenue growth over the last five years was slower than its financials peers
- Earnings per share lagged its peers over the last five years as they only grew by 8.6% annually
At $267.06 per share, CME Group trades at 24x forward P/E. To fully understand why you should be careful with CME, check out our full research report (it’s free for active Edge members).
Stocks We Like 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 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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