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. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Northwest Pipe (NWPX)
Consensus Price Target: $56.33 (8.1% implied return)
Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ: NWPX) is a manufacturer of pipeline systems for water infrastructure.
Why Are We Hesitant About NWPX?
- 5.9% annual revenue growth over the last two years was slower than its industrials peers
- High input costs result in an inferior gross margin of 17.6% that must be offset through higher volumes
- Annual earnings per share growth of 1% underperformed its revenue over the last five years, partly because it diluted shareholders
At $52.12 per share, Northwest Pipe trades at 15.8x forward P/E. If you’re considering NWPX for your portfolio, see our FREE research report to learn more.
American Airlines (AAL)
Consensus Price Target: $13.43 (3.7% implied return)
One of the ‘Big Four’ airlines in the US, American Airlines (NASDAQ: AAL) is a major global air carrier that serves both business and leisure travelers through its domestic and international flights.
Why Are We Out on AAL?
- Demand for its offerings was relatively low as its number of revenue passenger miles has underwhelmed
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
American Airlines’s stock price of $12.95 implies a valuation ratio of 8.7x forward P/E. To fully understand why you should be careful with AAL, check out our full research report (it’s free).
Barrett (BBSI)
Consensus Price Target: $51.50 (8.2% implied return)
Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ: BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions.
Why Does BBSI Worry Us?
- Subscale operations are evident in its revenue base of $1.20 billion, meaning it has fewer distribution channels than its larger rivals
- Free cash flow margin dropped by 10.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Barrett is trading at $47.60 per share, or 20.6x forward P/E. Dive into our free research report to see why there are better opportunities than BBSI.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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.
