Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.

Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in - to help you find attractive investment candidates backed by unbiased research. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Semtech (SMTC)

Consensus Price Target: $80.21 (10% implied return)

A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.

Why Do We Avoid SMTC?

1. Persistent operating margin losses and eroding margin over the last five years point to its preference for growth over profits
2. Lacking free cash flow margin got worse over the last five years as its investment needs accelerated
3. Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up

At $72.93 per share, Semtech trades at 37.4x forward P/E. Dive into our free research report to see why there are better opportunities than SMTC.

PACCAR (PCAR)

Consensus Price Target: $107.47 (3.1% implied return)

Founded more than a century ago, PACCAR (NASDAQ: PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.

Why Does PCAR Give Us Pause?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Earnings per share have contracted by 19.6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

PACCAR is trading at $104.25 per share, or 21x forward P/E. To fully understand why you should be careful with PCAR, check out our full research report (it’s free for active Edge members).

Standex (SXI)

Consensus Price Target: $260.40 (7.6% implied return)

Holding over 500 patents globally, Standex (NYSE: SXI) is a manufacturer and distributor of industrial components for various sectors.

Why Do We Think Twice About SXI?

1. Muted 6% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Free cash flow margin dropped by 4.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Standex’s stock price of $241.99 implies a valuation ratio of 27.3x forward P/E. Read our free research report to see why you should think twice about including SXI in your portfolio.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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