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:
Kimberly-Clark (KMB)
Consensus Price Target: $142.96 (3.5% implied return)
Originally founded as a Wisconsin paper mill in 1872, Kimberly-Clark (NYSE: KMB) is now a household products powerhouse known for personal care and tissue products.
Why Does KMB Fall Short?
- Flat unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Free cash flow margin has shown no improvement over the last year
Kimberly-Clark’s stock price of $138.10 implies a valuation ratio of 18.3x forward P/E. If you’re considering KMB for your portfolio, see our FREE research report to learn more.
Napco (NSSC)
Consensus Price Target: $27.70 (0.3% implied return)
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ: NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Why Are We Wary of NSSC?
- Annual revenue growth of 3.7% over the last two years was below our standards for the business services sector
- Modest revenue base of $181.2 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
Napco is trading at $27.63 per share, or 23.8x forward P/E. Check out our free in-depth research report to learn more about why NSSC doesn’t pass our bar.
One Stock to Buy:
Copart (CPRT)
Consensus Price Target: $61.89 (-1.8% implied return)
Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Do We Love CPRT?
- Market share has increased this cycle as its 15.2% annual revenue growth over the last five years was exceptional
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 18.3% annually, topping its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
At $63 per share, Copart trades at 38.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
