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.
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 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:
Analog Devices (ADI)
Consensus Price Target: $242.32 (8.5% implied return)
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Does ADI Give Us Pause?
- Sales tumbled by 13.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 8.1 percentage points
- Underwhelming 6.2% 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 $223.40 per share, Analog Devices trades at 29.8x forward P/E. If you’re considering ADI for your portfolio, see our FREE research report to learn more.
Robert Half (RHI)
Consensus Price Target: $49.30 (1.8% implied return)
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE: RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Do We Pass on RHI?
- Sales tumbled by 1.5% annually over the last five years, showing market trends are working against its favor during this cycle
- Sales were less profitable over the last five years as its earnings per share fell by 11.9% annually, worse than its revenue declines
- Waning returns on capital imply its previous profit engines are losing steam
Robert Half’s stock price of $48.43 implies a valuation ratio of 17.9x forward P/E. Dive into our free research report to see why there are better opportunities than RHI.
One Stock to Buy:
Badger Meter (BMI)
Consensus Price Target: $230.16 (-5.3% implied return)
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
Why Is BMI a Top Pick?
- Market share has increased this cycle as its 20% annual revenue growth over the last two years was exceptional
- Earnings per share have massively outperformed its peers over the last two years, increasing by 36.6% annually
- BMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Badger Meter is trading at $243 per share, or 52.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
