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. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Flex (FLEX)
Consensus Price Target: $47.14 (1.4% implied return)
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ: FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Why Do We Avoid FLEX?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.8% annually over the last two years
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Flex’s stock price of $46.50 implies a valuation ratio of 16.3x forward P/E. If you’re considering FLEX for your portfolio, see our FREE research report to learn more.
NV5 Global (NVEE)
Consensus Price Target: $23.74 (4.3% implied return)
Operating from over 100 locations across the U.S. and internationally, NV5 Global (NASDAQ: NVEE) provides engineering, environmental, geospatial, and technical consulting services to public and private sector clients for infrastructure and building projects.
Why Does NVEE Worry Us?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 5.1 percentage points
- Earnings per share fell by 2.8% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin shrank by 13.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $22.75 per share, NV5 Global trades at 17.1x forward P/E. Read our free research report to see why you should think twice about including NVEE in your portfolio.
PennyMac Mortgage Investment Trust (PMT)
Consensus Price Target: $13.86 (11.7% implied return)
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE: PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Are We Cautious About PMT?
- Annual sales declines of 1.3% for the past two years show its products and services struggled to connect with the market during this cycle
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 1.6% annually over the last two years
- Tangible book value per share is projected to decrease by 2.2% over the next 12 months as its capital position continues weakening
PennyMac Mortgage Investment Trust is trading at $12.41 per share, or 0.8x forward P/B. Check out our free in-depth research report to learn more about why PMT doesn’t pass our bar.
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 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
