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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the skepticism is well-placed.
Two Stocks to Sell:
Penguin Solutions (PENG)
Consensus Price Target: $27.13 (2% implied return)
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Why Should You Dump PENG?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5% annually over the last two years
- Gross margin of 29.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Underwhelming 5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
At $26.60 per share, Penguin Solutions trades at 15.6x forward P/E. If you’re considering PENG for your portfolio, see our FREE research report to learn more.
Cadre (CDRE)
Consensus Price Target: $38.33 (7.3% implied return)
Originally known as Safariland, Cadre (NYSE: CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Why Does CDRE Give Us Pause?
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 1.7 percentage points
- Earnings per share were flat over the last four years and fell short of the peer group average
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7 percentage points
Cadre is trading at $35.72 per share, or 24x forward P/E. Read our free research report to see why you should think twice about including CDRE in your portfolio.
One Stock to Buy:
Houlihan Lokey (HLI)
Consensus Price Target: $207.80 (1.2% implied return)
Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE: HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.
Why Are We Backing HLI?
- Annual revenue growth of 17.2% over the last five years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 29% annual growth in its earnings per share outpaced its revenue
- Annual tangible book value per share growth of 43.7% over the last two years was superb and indicates its capital strength increased during this cycle
Houlihan Lokey’s stock price of $205.27 implies a valuation ratio of 26.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our 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-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
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