Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
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 are three stocks where the skepticism is well-placed and some better opportunities to consider.
Kratos (KTOS)
Consensus Price Target: $64.46 (0.4% implied return)
Established with a commitment to supporting national security, Kratos (NASDAQ:KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Does KTOS Fall Short?
- Free cash flow margin shrank by 6.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- ROIC of 3.4% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Kratos is trading at $64.18 per share, or 109.2x forward P/E. Dive into our free research report to see why there are better opportunities than KTOS.
Trimble (TRMB)
Consensus Price Target: $94.75 (12.8% implied return)
Playing a role in the construction of the Paris Grand, Trimble (NASDAQ:TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.
Why Should You Sell TRMB?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- 13.7 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
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
At $84 per share, Trimble trades at 27x forward P/E. To fully understand why you should be careful with TRMB, check out our full research report (it’s free).
Selective Insurance Group (SIGI)
Consensus Price Target: $85 (8.8% implied return)
Founded in 1926 during the early days of automobile insurance, Selective Insurance Group (NASDAQ:SIGI) is a property and casualty insurance company that sells commercial, personal, and excess and surplus lines insurance products through independent agents.
Why Are We Cautious About SIGI?
- Sales are projected to tank by 60.8% over the next 12 months as demand evaporates
- Costs have risen faster than its revenue over the last four years, causing its combined ratio to worsen by 6.6 percentage points
- Annual earnings per share growth of 11.7% underperformed its revenue over the last two years, showing its incremental sales were less profitable
Selective Insurance Group’s stock price of $78.15 implies a valuation ratio of 1.4x forward P/B. If you’re considering SIGI for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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