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 are three stocks where the skepticism is well-placed and some better opportunities to consider.

JLL (JLL)

Consensus Price Target: $358.40 (9.4% implied return)

Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE: JLL) is a company specializing in real estate advisory and investment management services.

Why Are We Out on JLL?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 8.1% for the last five years
2. Low free cash flow margin of 2.8% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $327.52 per share, JLL trades at 16.9x forward P/E. Dive into our free research report to see why there are better opportunities than JLL.

Caterpillar (CAT)

Consensus Price Target: $587.67 (-2% implied return)

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Are We Hesitant About CAT?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.4% annually over the last two years
2. 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
3. Earnings per share have dipped by 2% annually over the past two years, which is concerning because stock prices follow EPS over the long term

Caterpillar’s stock price of $599.50 implies a valuation ratio of 28.8x forward P/E. To fully understand why you should be careful with CAT, check out our full research report (it’s free for active Edge members).

Old Dominion Freight Line (ODFL)

Consensus Price Target: $155.46 (1.2% implied return)

With its name deriving from the Commonwealth of Virginia’s nickname, Old Dominion (NASDAQ: ODFL) delivers less-than-truckload (LTL) and full-container load freight.

Why Does ODFL Give Us Pause?

1. Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Old Dominion Freight Line is trading at $153.67 per share, or 31x forward P/E. If you’re considering ODFL for your portfolio, see our FREE research report to learn more.

Stocks We Like More

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