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. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Honeywell (HON)
Consensus Price Target: $251.50 (8.8% implied return)
Originally founded in 1906 as a thermostat company, Honeywell (NASDAQ: HON) is a multinational conglomerate known for its aerospace systems, building technologies, performance materials, and safety and productivity solutions.
Why Are We Cautious About HON?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 3.1 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $231.12 per share, Honeywell trades at 22.1x forward P/E. To fully understand why you should be careful with HON, check out our full research report (it’s free).
Pitney Bowes (PBI)
Consensus Price Target: $12.50 (2.9% implied return)
With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE: PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes.
Why Is PBI Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 11.8% annually over the last five years
- Sales are projected to tank by 3.9% over the next 12 months as its demand continues evaporating
Pitney Bowes’s stock price of $12.15 implies a valuation ratio of 8.1x forward P/E. Check out our free in-depth research report to learn more about why PBI doesn’t pass our bar.
MGIC Investment (MTG)
Consensus Price Target: $28.50 (4% implied return)
Founded in 1957 when the modern mortgage insurance industry was in its infancy, MGIC Investment (NYSE: MTG) provides private mortgage insurance that protects lenders when homebuyers default on their loans, enabling borrowers to purchase homes with smaller down payments.
Why Are We Hesitant About MTG?
- Net premiums earned contracted by 1.1% annually over the last five years, showing unfavorable market dynamics this cycle
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 11.6% annually
MGIC Investment is trading at $27.40 per share, or 1.1x forward P/B. Read our free research report to see why you should think twice about including MTG in your portfolio.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
