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. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Atkore (ATKR)

Consensus Price Target: $74 (3.7% implied return)

Protecting the things that power our world, Atkore (NYSE: ATKR) designs and manufactures electrical safety products.

Why Should You Sell ATKR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 9.6% annually over the last two years
2. Free cash flow margin shrank by 9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Eroding returns on capital suggest its historical profit centers are aging

At $71.36 per share, Atkore trades at 12.8x forward P/E. If you’re considering ATKR for your portfolio, see our FREE research report to learn more.

Plexus (PLXS)

Consensus Price Target: $210.80 (-13.1% implied return)

With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.

Why Does PLXS Worry Us?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Low free cash flow margin of 2.4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Eroding returns on capital suggest its historical profit centers are aging

Plexus’s stock price of $242.64 implies a valuation ratio of 29.9x forward P/E. Read our free research report to see why you should think twice about including PLXS in your portfolio.

Murphy Oil (MUR)

Consensus Price Target: $41.06 (5.2% implied return)

Operating in waters over a mile deep in the Gulf of Mexico and extracting hydrocarbons from tight shale rock formations in Texas, Murphy Oil (NYSE: MUR) explores for and produces crude oil, natural gas, and natural gas liquids from fields in North America and Asia.

Why Are We Wary of MUR?

1. Annual revenue growth of 6.7% over the last five years was below our standards for the energy upstream and integrated energy sector
2. Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 11.1 percentage points

Murphy Oil is trading at $39.03 per share, or 9.7x forward P/E. Check out our free in-depth research report to learn more about why MUR doesn’t pass our bar.

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