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.
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. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.
Two Stocks to Sell:
J. M. Smucker (SJM)
Consensus Price Target: $121.14 (5.4% implied return)
Best known for its fruit jams and spreads, J.M Smucker (NYSE: SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Does SJM Give Us Pause?
- Sales trends were unexciting over the last three years as its 3.7% annual growth was below the typical consumer staples company
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
At $114.95 per share, J. M. Smucker trades at 11.3x forward P/E. Check out our free in-depth research report to learn more about why SJM doesn’t pass our bar.
Labcorp (LH)
Consensus Price Target: $273.34 (9% implied return)
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE: LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Why Are We Wary of LH?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 13.3 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Labcorp is trading at $250.80 per share, or 15.2x forward P/E. Read our free research report to see why you should think twice about including LH in your portfolio.
One Stock to Watch:
Procter & Gamble (PG)
Consensus Price Target: $171.51 (3.6% implied return)
Founded by candle maker William Procter and soap maker James Gamble, Proctor & Gamble (NYSE: PG) is a consumer products behemoth whose product portfolio spans everything from facial tissues to laundry detergent to feminine care to men’s grooming.
Why Do We Watch PG?
- Unparalleled brand awareness is evident in its $83.93 billion revenue base, which gives it advantageous terms because retailers must stock its products
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 25.2%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Procter & Gamble’s stock price of $165.61 implies a valuation ratio of 23.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
