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.
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 is one stock poised to prove Wall Street wrong and two where the skepticism is well-placed.
Two Stocks to Sell:
RE/MAX (RMAX)
Consensus Price Target: $9 (3.5% implied return)
Short for Real Estate Maximums, RE/MAX (NYSE: RMAX) operates a real estate franchise network spanning over 100 countries and territories.
Why Are We Out on RMAX?
- Number of agents has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share fell by 8.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $8.70 per share, RE/MAX trades at 6.5x forward P/E. If you’re considering RMAX for your portfolio, see our FREE research report to learn more.
AT&T (T)
Consensus Price Target: $29.30 (5.2% implied return)
Founded by Alexander Graham Bell, AT&T (NYSE: T) is a multinational telecomm conglomerate providing a range of communications and internet services.
Why Do We Think T Will Underperform?
- Products and services have few die-hard fans as sales have declined by 7.3% annually over the last five years
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 9% annually, worse than its revenue
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
AT&T is trading at $27.84 per share, or 13.3x forward P/E. Dive into our free research report to see why there are better opportunities than T.
One Stock to Buy:
ServiceNow (NOW)
Consensus Price Target: $1,088 (11.6% implied return)
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE: NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
Why Are We Backing NOW?
- Growth in its current remaining performance obligations (cRPO) has averaged 22.3% over the last year, showing it has a steady sales pipeline that will drive future revenue
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 12.9%, and its profits increased over the last year as it scaled
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
ServiceNow’s stock price of $975 implies a valuation ratio of 14.9x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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-small-cap company Comfort Systems (+782% 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
