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. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Utz (UTZ)
Consensus Price Target: $14.31 (1.5% implied return)
Tracing its roots back to 1921 when Bill and Salie Utz began making potato chips in their kitchen, Utz Brands (NYSE:UTZ) offers salty snacks such as potato chips, tortilla chips, pretzels, cheese snacks, and ready-to-eat popcorn, among others.
Why Do We Think UTZ Will Underperform?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Revenue base of $1.45 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Underwhelming 0% return on capital reflects management’s difficulties in finding profitable growth opportunities
Utz’s stock price of $14.11 implies a valuation ratio of 17.4x forward P/E. To fully understand why you should be careful with UTZ, check out our full research report (it’s free).
Steven Madden (SHOO)
Consensus Price Target: $51.56 (5.5% implied return)
As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ:SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.
Why Are We Out on SHOO?
- Lackluster 13.4% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Poor free cash flow margin of 6.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $48.88 per share, Steven Madden trades at 20.3x forward P/E. If you’re considering SHOO for your portfolio, see our FREE research report to learn more.
AMC Entertainment (AMC)
Consensus Price Target: $2.72 (12.5% implied return)
With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE:AMC) operates movie theaters primarily in the US and Europe.
Why Is AMC Risky?
- Sales trends were unexciting over the last two years as its 7.9% annual growth was below the typical consumer discretionary company
- Free cash flow margin is projected to show no improvement next year
- 11× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
AMC Entertainment is trading at $2.41 per share, or 13.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than AMC.
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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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.