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 facing legitimate challenges and some alternatives worth exploring instead.
Etsy (ETSY)
Consensus Price Target: $52.46 (-3.7% 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 Does ETSY Give Us Pause?
- Market opportunities are plateauing as its active buyers were flat over the last two years
- Forecasted revenue decline of 1.9% for the upcoming 12 months implies demand will fall off a cliff
- Earnings growth underperformed the sector average over the last three years as its EPS grew by just 2.6% annually
At $54.50 per share, Etsy trades at 7.6x forward EV/EBITDA. Read our free research report to see why you should think twice about including ETSY in your portfolio.
Church & Dwight (CHD)
Consensus Price Target: $100.39 (3.6% implied return)
Best known for its Arm & Hammer baking soda, Church & Dwight (NYSE: CHD) is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.
Why Are We Hesitant About CHD?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Estimated sales growth of 1% for the next 12 months implies demand will slow from its three-year trend
- Efficiency has decreased over the last year as its operating margin fell by 4.9 percentage points
Church & Dwight’s stock price of $96.94 implies a valuation ratio of 25.8x forward P/E. Dive into our free research report to see why there are better opportunities than CHD.
Kimball Electronics (KE)
Consensus Price Target: $19.75 (2.7% implied return)
Founded in 1961, Kimball Electronics (NYSE: KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Why Do We Avoid KE?
- Annual sales declines of 5% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 13.7% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Low free cash flow margin of -0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Kimball Electronics is trading at $19.24 per share, or 17.9x forward P/E. To fully understand why you should be careful with KE, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
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
