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.
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. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Denny's (DENN)
Consensus Price Target: $5.55 (0.9% implied return)
Open around the clock, Denny’s (NASDAQ: DENN) is a chain of diner restaurants serving breakfast and traditional American fare.
Why Do We Avoid DENN?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Free cash flow margin shrank by 8.7 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $5.50 per share, Denny's trades at 10.9x forward P/E. If you’re considering DENN for your portfolio, see our FREE research report to learn more.
Brunswick (BC)
Consensus Price Target: $66 (0.9% implied return)
Formerly known as Brunswick-Balke-Collender Company, Brunswick (NYSE: BC) is a designer and manufacturer of recreational marine products, including boats, engines, and marine parts.
Why Is BC Risky?
- Sales tumbled by 13% annually over the last two years, showing consumer trends are working against its favor
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 4.2% annually while its revenue grew
- Waning returns on capital imply its previous profit engines are losing steam
Brunswick’s stock price of $65.40 implies a valuation ratio of 16.4x forward P/E. Read our free research report to see why you should think twice about including BC in your portfolio.
Guardant Health (GH)
Consensus Price Target: $61.95 (14.7% implied return)
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Why Is GH Not Exciting?
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 19.6% annually
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Guardant Health is trading at $54 per share, or 6.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than GH.
Stocks We Like More
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Don’t let fear keep you from great opportunities and take a look at Top 6 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-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
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