1 Unpopular Stock That Deserves Some Love and 2 We Brush Off
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 is one stock poised to prove Wall Street wrong and two where the skepticism is well-placed.
Two Stocks to Sell:
Sally Beauty (SBH)
Consensus Price Target: $17 (3.7% implied return)
Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE:SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.
Why Do We Steer Clear of SBH?
- Failure to add new stores points to soft demand and a focus on boosting sales at current locations
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Subscale operations are evident in its revenue base of $3.73 billion, meaning it has fewer distribution channels than its larger rivals
Sally Beauty is trading at $16.40 per share, or 7.5x forward P/E. Dive into our free research report to see why there are better opportunities than SBH.
Starbucks (SBUX)
Consensus Price Target: $112.23 (5.1% implied return)
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Are We Cautious About SBUX?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Estimated sales decline of 1.5% for the next 12 months implies a challenging demand environment
- Efficiency has decreased over the last year as its operating margin fell by 3 percentage points
At $106.74 per share, Starbucks trades at 36x forward P/E. Read our free research report to see why you should think twice about including SBUX in your portfolio.
One Stock to Watch:
Butterfield Bank (NTB)
Consensus Price Target: $64 (7.4% implied return)
Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank (NYSE:NTB) provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.
Why Are We Fans of NTB?
- Market share is on track to rise over the next 12 months as its 32.8% projected net interest income growth implies demand will accelerate from its five-year trend
- Exciting tangible book value per share outlook for the upcoming 12 months calls for 30.4% growth, an acceleration from its two-year trend
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Butterfield Bank’s stock price of $59.62 implies a valuation ratio of 1.8x forward P/B. Is now the time to initiate a position? Find out in 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.