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.
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. That said, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Rapid7 (RPD)
Consensus Price Target: $8.20 (-15% implied return)
With its name inspired by the need for quick responses to cyber threats, Rapid7 (NASDAQ:RPD) provides cybersecurity software and services that help organizations detect vulnerabilities, monitor threats, and respond to security incidents.
Why Do We Pass on RPD?
- Offerings struggled to generate interest as its billings were flat over the last year
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Efficiency has decreased over the last year as its operating margin fell by 1.7 percentage points
Rapid7 is trading at $9.65 per share, or 0.8x forward price-to-sales. If you’re considering RPD for your portfolio, see our FREE research report to learn more.
Toll Brothers (TOL)
Consensus Price Target: $168.20 (15.2% implied return)
Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE:TOL) is a luxury homebuilder across the United States.
Why Does TOL Worry Us?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 9.1% declines over the past two years
- Forecasted revenue decline of 2.9% for the upcoming 12 months implies demand will fall off a cliff
- Earnings per share have contracted by 5.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
At $146.01 per share, Toll Brothers trades at 11.2x forward P/E. Read our free research report to see why you should think twice about including TOL in your portfolio.
SAIC (SAIC)
Consensus Price Target: $120 (2.5% implied return)
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ:SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Are We Hesitant About SAIC?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Sales are projected to tank by 1.6% over the next 12 months as demand evaporates further
SAIC’s stock price of $117.13 implies a valuation ratio of 12.1x forward P/E. To fully understand why you should be careful with SAIC, check out our full research report (it’s free).
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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.