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 are two stocks where Wall Street’s pessimism is creating a buying opportunity and one where the outlook is warranted.
One Stock to Sell:
Bank of Hawaii (BOH)
Consensus Price Target: $81.83 (2.9% implied return)
Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE: BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.
Why Should You Sell BOH?
- Muted 1.4% annual revenue growth over the last five years shows its demand lagged behind its banking peers
- Net interest income trends were unexciting over the last five years as its 1.6% annual growth was below the typical banking firm
- Net interest margin of 2.3% is well below other banks, signaling its loans aren’t very profitable
At $79.57 per share, Bank of Hawaii trades at 2x forward P/B. Check out our free in-depth research report to learn more about why BOH doesn’t pass our bar.
Two Stocks to Buy:
Curtiss-Wright (CW)
Consensus Price Target: $717.43 (-0.7% implied return)
Formed from a merger of 12 companies, Curtiss-Wright (NYSE: CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.
Why Will CW Beat the Market?
- Impressive 10.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Excellent operating margin of 16.9% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- Share buybacks catapulted its annual earnings per share growth to 18.8%, which outperformed its revenue gains over the last two years
Curtiss-Wright’s stock price of $722.25 implies a valuation ratio of 48.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Humana (HUM)
Consensus Price Target: $211.21 (7.1% implied return)
With over 80% of its revenue derived from federal government contracts, Humana (NYSE: HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.
Why Is HUM a Top Pick?
- Annual revenue growth of 12.4% over the last two years beat the sector average and underscores the unique value of its offerings
- Unparalleled scale of $129.8 billion in revenue enables it to spread administrative costs across a larger membership base
- Industry-leading 33.1% return on capital demonstrates management’s skill in finding high-return investments
Humana is trading at $197.24 per share, or 21.9x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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