1 Unpopular Stock That Should Get More Attention and 2 We Find Risky

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.

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 is one stock where Wall Street’s pessimism is creating a buying opportunity and two facing legitimate challenges.

Two Stocks to Sell:

Target (TGT)

Consensus Price Target: $125.53 (-3.1% implied return)

With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.

Why Do We Avoid TGT?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 28.1%
3. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability

Target is trading at $129.56 per share, or 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than TGT.

Comcast (CMCSA)

Consensus Price Target: $33.07 (19.7% implied return)

Formerly known as American Cable Systems, Comcast (NASDAQ:CMCSA) is a multinational telecommunications company offering a wide range of services.

Why Do We Pass on CMCSA?

1. Sluggish trends in its domestic broadband customers suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Free cash flow margin is forecasted to shrink by 3.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Comcast’s stock price of $27.62 implies a valuation ratio of 8.8x forward P/E. To fully understand why you should be careful with CMCSA, check out our full research report (it’s free).

One Stock to Watch:

Analog Devices (ADI)

Consensus Price Target: $393.16 (-2.2% implied return)

Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ:ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.

Why Does ADI Stand Out?

1. Market share has increased this cycle as its 14.9% annual revenue growth over the last five years was exceptional
2. Offerings are mission-critical for businesses and lead to a top-tier gross margin of 60.3%
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy

At $402.00 per share, Analog Devices trades at 33.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

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