When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as 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 where the skepticism is well-placed.
Two Stocks to Sell:
Sabre (SABR)
Consensus Price Target: $1.94 (-6.2% implied return)
Originally a division of American Airlines, Sabre (NASDAQ: SABR) is a technology provider for the global travel and tourism industry.
Why Should You Dump SABR?
- Demand for its offerings was relatively low as its number of total bookings has underwhelmed
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Sabre’s stock price of $2.07 implies a valuation ratio of 7.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SABR in your portfolio.
Artisan Partners (APAM)
Consensus Price Target: $37.75 (-0.7% implied return)
Founded in 1994 with a focus on autonomous investment teams and a "high-value-added" approach, Artisan Partners (NYSE: APAM) is an investment management firm that offers actively managed equity and fixed income strategies to institutional and individual investors.
Why Should You Sell APAM?
- Sales trends were unexciting over the last five years as its 4.4% annual growth was below the typical financials company
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
At $38.03 per share, Artisan Partners trades at 9.8x forward P/E. To fully understand why you should be careful with APAM, check out our full research report (it’s free).
One Stock to Buy:
RBC Bearings (RBC)
Consensus Price Target: $598.71 (-1.2% implied return)
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Are We Bullish on RBC?
- Market share has increased this cycle as its 23.1% annual revenue growth over the last five years was exceptional
- Earnings per share have massively outperformed its peers over the last two years, increasing by 18.3% annually
- Strong free cash flow margin of 15.8% enables it to reinvest or return capital consistently
RBC Bearings is trading at $605.97 per share, or 45.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
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