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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Edgewell Personal Care (EPC)
Consensus Price Target: $26 (10.3% implied return)
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Why Do We Avoid EPC?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Sales over the last three years were less profitable as its earnings per share fell by 2.6% annually while its revenue was flat
- Free cash flow margin shrank by 4.9 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Edgewell Personal Care’s stock price of $23.58 implies a valuation ratio of 7.4x forward P/E. Read our free research report to see why you should think twice about including EPC in your portfolio.
Arrow Electronics (ARW)
Consensus Price Target: $116.75 (-7.9% implied return)
Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally.
Why Do We Think ARW Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.8% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 32.9% annually, worse than its revenue declines
- Waning returns on capital imply its previous profit engines are losing steam
Arrow Electronics is trading at $126.70 per share, or 5.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than ARW.
Invesco (IVZ)
Consensus Price Target: $22.58 (2.6% implied return)
With roots dating back to 1935 when it pioneered the first mutual fund with an objective of capital growth, Invesco (NYSE:IVZ) is a global asset management firm that offers investment solutions across equities, fixed income, alternatives, and multi-asset strategies.
Why Are We Out on IVZ?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.4% annually over the last five years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- ROE of 5.8% reflects management’s challenges in identifying attractive investment opportunities
At $22.02 per share, Invesco trades at 11.4x forward P/E. If you’re considering IVZ for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
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