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.
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. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Allegro MicroSystems (ALGM)
Consensus Price Target: $54.42 (-8.2% implied return)
The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ: ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.
Why Does ALGM Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.9% annually over the last two years
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Earnings per share have dipped by 15.8% annually over the past five years, which is concerning because stock prices follow EPS over the long term
Allegro MicroSystems is trading at $59.28 per share, or 55.1x forward P/E. To fully understand why you should be careful with ALGM, check out our full research report (it’s free).
Lindsay (LNN)
Consensus Price Target: $124 (4.2% implied return)
A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE: LNN) provides a variety of proprietary water management and road infrastructure products and services.
Why Are We Hesitant About LNN?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Earnings per share have contracted by 6.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Waning returns on capital imply its previous profit engines are losing steam
At $118.96 per share, Lindsay trades at 19x forward P/E. Read our free research report to see why you should think twice about including LNN in your portfolio.
Provident Financial Services (PFS)
Consensus Price Target: $25 (10.1% implied return)
Founded in 1839 and serving communities across New Jersey, Pennsylvania, and New York, Provident Financial Services (NYSE: PFS) operates a regional bank providing commercial, residential, and consumer lending alongside wealth management and insurance services.
Why Does PFS Fall Short?
- Net interest margin of 3.4% reflects its high servicing and capital costs
- Annual earnings per share growth of 5.2% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 1% annually over the last two years
Provident Financial Services’s stock price of $22.71 implies a valuation ratio of 1x forward P/B. Dive into our free research report to see why there are better opportunities than PFS.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
