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 facing legitimate challenges.
Two stocks to sell:
Target (TGT)
Consensus Price Target: $163.35 (6.9% implied return)
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE: TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Why Are We Hesitant About TGT?
- Sales stagnated over the last three years and signal the need for new growth strategies
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Gross margin of 28.1% is below its competitors, leaving less money for marketing and promotions
At $152.80 per share, Target trades at 17x forward P/E. Check out our free in-depth research report to learn more about why TGT doesn’t pass our bar.
A. O. Smith (AOS)
Consensus Price Target: $66.20 (7.4% implied return)
Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.
Why Is AOS Not Exciting?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
A. O. Smith is trading at $61.67 per share, or 16.3x forward P/E. Read our free research report to see why you should think twice about including AOS in your portfolio.
One stock to watch:
Chevron (CVX)
Consensus Price Target: $232.50 (-0.3% implied return)
Operating everything from deepwater drilling rigs to corner gas stations, Chevron (NYSE: CVX) explores for, produces, and transports crude oil and natural gas, then refines that crude oil into gasoline, diesel, and other petroleum products.
Why Are We Fans of CVX?
- Impressive 6.3% annual revenue growth over the last ten years indicates it’s winning market share this cycle
- Dominant market position is represented by its $215.3 billion in revenue and gives it fixed cost leverage when sales grow
- Solid free cash flow generation relative to most peers gives it a cushion and grants it various reinvestment opportunities
Chevron’s stock price of $233.24 implies a valuation ratio of 11.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks we like even more
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
