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.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. That said, here is one stock poised to prove Wall Street wrong and two facing legitimate challenges.
Two Stocks to Sell:
BlackLine (BL)
Consensus Price Target: $56.91 (3.5% implied return)
Started in 2001 by software engineer Therese Tucker, one of the very few women founders who took their companies public, BlackLine (NASDAQ: BL) provides software for organizations to automate accounting and finance tasks.
Why Does BL Give Us Pause?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 7.4% underwhelmed
- Estimated sales growth of 7.5% for the next 12 months implies demand will slow from its three-year trend
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.1 percentage points
At $55 per share, BlackLine trades at 5x forward price-to-sales. To fully understand why you should be careful with BL, check out our full research report (it’s free).
Avery Dennison (AVY)
Consensus Price Target: $190.83 (4% implied return)
Founded as Kum Kleen Products, Avery Dennison (NYSE: AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.
Why Do We Steer Clear of AVY?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- 3.7 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
- Waning returns on capital imply its previous profit engines are losing steam
Avery Dennison’s stock price of $183.57 implies a valuation ratio of 17.8x forward P/E. Dive into our free research report to see why there are better opportunities than AVY.
One Stock to Watch:
ResMed (RMD)
Consensus Price Target: $264.49 (4.3% implied return)
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Are We Positive On RMD?
- Constant currency growth averaged 12% over the past two years, showing it can expand globally regardless of the macroeconomic environment
- Additional sales over the last five years increased its profitability as the 15.7% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin jumped by 7.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
ResMed is trading at $253.64 per share, or 24.9x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
