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. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
C3.ai (AI)
Consensus Price Target: $14.67 (-19.4% implied return)
Named after the three Cs of its original focus—carbon, cloud computing, and customer relationship management—C3.ai (NYSE: AI) provides enterprise AI software that helps organizations develop, deploy, and operate large-scale artificial intelligence applications across various industries.
Why Do We Think AI Will Underperform?
- Offerings struggled to generate meaningful interest as its average billings growth of 12.4% over the last year did not impress
- Gross margin of 56.6% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Negative free cash flow raises questions about the return timeline for its investments
C3.ai is trading at $18.20 per share, or 8x forward price-to-sales. If you’re considering AI for your portfolio, see our FREE research report to learn more.
Tapestry (TPR)
Consensus Price Target: $117.22 (1.9% implied return)
Originally founded as Coach, Tapestry (NYSE: TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Should You Dump TPR?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Projected sales growth of 3% for the next 12 months suggests sluggish demand
- Diminishing returns on capital suggest its earlier profit pools are drying up
Tapestry’s stock price of $115.01 implies a valuation ratio of 21.3x forward P/E. Dive into our free research report to see why there are better opportunities than TPR.
Applied Digital (APLD)
Consensus Price Target: $21.11 (-14.7% implied return)
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ: APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Are We Wary of APLD?
- Issuance of new shares over the last two years caused its earnings per share to fall by 78.9% annually while its revenue grew
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $24.75 per share, Applied Digital trades at 61.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including APLD in your portfolio.
Stocks We Like 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
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