3 of Wall Street’s Favorite Stocks That Concern Us

Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.

Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.

Newmark (NMRK)

Consensus Price Target: $18.67 (74.9% implied return)

Founded in 1929, Newmark (NASDAQ:NMRK) provides commercial real estate services, including leasing advisory, global corporate services, investment sales and capital markets, property and facilities management, valuation and advisory, and consulting.

Why Should You Sell NMRK?

  1. Flat sales over the last two years suggest it must innovate and find new ways to grow

  2. Earnings per share fell by 5.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable

  3. Cash burn makes us question whether it can achieve sustainable long-term growth

Newmark is trading at $10.29 per share, or 7.9x forward price-to-earnings. If you’re considering NMRK for your portfolio, see our FREE research report to learn more .

UFP Industries (UFPI)

Consensus Price Target: $135.50 (26.4% implied return)

Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ:UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.

Why Do We Pass on UFPI?

  1. Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy

  2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable

  3. Waning returns on capital imply its previous profit engines are losing steam

UFP Industries’s stock price of $105.26 implies a valuation ratio of 14.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why UFPI doesn’t pass our bar .

NetApp (NTAP)

Consensus Price Target: $136.75 (45% implied return)

Founded in 1992 as a pioneer in networked storage technology, NetApp (NASDAQ:NTAP) provides data storage and management solutions that help organizations store, protect, and optimize their data across on-premises data centers and public clouds.

Why Are We Cautious About NTAP?

  1. Flat sales over the last two years suggest it must find different ways to grow during this cycle

  2. Offerings struggled to generate interest as its billings were flat over the past two years

  3. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4%

OK