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 is one stock where you should be greedy instead of fearful and two where the skepticism is well-placed.

Two Stocks to Sell:

Walmart (WMT)

Consensus Price Target: $110.24 (6.3% implied return)

Known for its large-format Supercenters, Walmart (NYSE: WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Why Does WMT Give Us Pause?

1. Sizable revenue base leads to growth challenges as its 4.8% annual revenue increases over the last six years fell short of other consumer retail companies
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 24.7%
3. Earnings per share fell by 10.9% annually over the last six years while its revenue grew, showing its incremental sales were much less profitable

Walmart is trading at $103.70 per share, or 38.8x forward P/E. To fully understand why you should be careful with WMT, check out our full research report (it’s free).

Proto Labs (PRLB)

Consensus Price Target: $50 (6.7% implied return)

Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE: PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.

Why Do We Steer Clear of PRLB?

1. Annual revenue growth of 2.4% over the last two years was below our standards for the industrials sector
2. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 7.6 percentage points
3. Earnings per share have contracted by 9.3% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

Proto Labs’s stock price of $46.87 implies a valuation ratio of 31.2x forward P/E. If you’re considering PRLB for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Federal Signal (FSS)

Consensus Price Target: $132 (3.8% implied return)

Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE: FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.

Why Should You Buy FSS?

1. Operating margin expanded by 4.4 percentage points over the last five years as it scaled and became more efficient
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 28.5% outpaced its revenue gains
3. Free cash flow margin expanded by 4.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

At $127.15 per share, Federal Signal trades at 31.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even 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-micro-cap company Tecnoglass (+1,754% 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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.