Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
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. That said, here is one stock where you should be greedy instead of fearful and two where the skepticism is well-placed.
Two stocks to sell:
Coty (COTY)
Consensus price target: $2.70 (-22.9% implied return)
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Steer Clear of COTY?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Forecasted revenue decline of 3.2% for the upcoming 12 months implies demand will fall off a cliff
- Earnings per share fell by 21.2% annually over the last three years while its revenue was flat, partly because it diluted shareholders
At $3.50 per share, Coty trades at 11.6x forward P/E. Dive into our free research report to see why there are better opportunities than COTY.
Connection (CNXN)
Consensus price target: $91 (3.6% implied return)
Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.
Why Do We Think Twice About CNXN?
- Muted 2.6% annual revenue growth over the last five years shows its demand lagged behind its business services peers
- Adjusted operating margin was unchanged over the last five years, suggesting it failed to gain leverage on its fixed costs
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.9% for the last five years
Connection’s stock price of $87.83 implies a valuation ratio of 18.4x forward P/E. Read our free research report to see why you should think twice about including CNXN in your portfolio.
One stock to buy:
Ryan Specialty (RYAN)
Consensus price target: $49.66 (4.5% implied return)
Founded in 2010 by insurance industry veteran Patrick Ryan, Ryan Specialty (NYSE: RYAN) is a wholesale insurance broker and underwriting manager that helps retail brokers place complex or hard-to-place risks with insurance carriers.
Why Will RYAN Beat the Market?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 9.4% over the past two years
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 16% annually
- Strong free cash flow margin of 17.8% enables it to reinvest or return capital consistently
Ryan Specialty is trading at $47.54 per share, or 19.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-quality stocks for all market conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
