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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. Keeping that in mind, here are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Astec (ASTE)
Consensus Price Target: $42.50 (26.5% implied return)
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Are We Hesitant About ASTE?
- Sales trends were unexciting over the last two years as its 1.2% annual growth was below the typical industrials company
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.5%
- 12.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Astec is trading at $33.98 per share, or 13.5x forward price-to-earnings. To fully understand why you should be careful with ASTE, check out our full research report (it’s free).
BrightView (BV)
Consensus Price Target: $18.11 (40.8% implied return)
An official field consultant for Major League Baseball, BrightView (NYSE: BV) offers landscaping design, development, and maintenance.
Why Is BV Risky?
- Annual sales declines of 1.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
BrightView’s stock price of $13.27 implies a valuation ratio of 15.2x forward price-to-earnings. If you’re considering BV for your portfolio, see our FREE research report to learn more.
CSG (CSGS)
Consensus Price Target: $68.11 (24.1% implied return)
Powering billions of critical customer interactions annually, CSG Systems (NASDAQ: CSGS) provides cloud-based software platforms that help companies manage customer interactions, process payments, and monetize their services.
Why Do We Avoid CSGS?
- Sales trends were unexciting over the last two years as its 4.8% annual growth was below the typical business services company
- Free cash flow margin shrank by 5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $59.99 per share, CSG trades at 13.4x forward price-to-earnings. Read our free research report to see why you should think twice about including CSGS in your portfolio.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
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