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. 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:
M&T Bank (MTB)
Consensus Price Target: $233.17 (0% implied return)
Tracing its roots back to 1856 when it was founded as Manufacturers and Traders Bank in Buffalo, New York, M&T Bank (NYSE: MTB) is a regional bank holding company that provides retail and commercial banking, trust, wealth management, and investment services to consumers and businesses.
Why Are We Hesitant About MTB?
- Muted 3% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- Estimated net interest income growth of 3.3% for the next 12 months implies demand will slow from its five-year trend
- Estimated tangible book value per share growth of 5.9% for the next 12 months implies profitability will slow from its two-year trend
M&T Bank is trading at $233.27 per share, or 1.3x forward P/B. Read our free research report to see why you should think twice about including MTB in your portfolio.
TFS Financial (TFSL)
Consensus Price Target: $15.50 (-9.1% implied return)
Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ: TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.
Why Do We Pass on TFSL?
- Muted 3.9% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Weak unit economics are reflected in its net interest margin of 1.7%, one of the worst among bank companies
- Earnings per share lagged its peers over the last five years as they only grew by 2% annually
TFS Financial’s stock price of $17.06 implies a valuation ratio of 2.4x forward P/B. If you’re considering TFSL for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Sanmina (SANM)
Consensus Price Target: $223.75 (-13% implied return)
Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Why Is SANM a Top Pick?
- Annual revenue growth of 19.3% over the past two years was outstanding, reflecting market share gains this cycle
- Projected revenue growth of 29.3% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Share repurchases over the last two years enabled its annual earnings per share growth of 25.3% to outpace its revenue gains
At $257.22 per share, Sanmina trades at 21x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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