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.
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 are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Take-Two (TTWO)
Consensus Price Target: $243.05 (5.7% implied return)
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ: TTWO) is one of the world’s largest video game publishers.
Why Are We Hesitant About TTWO?
- EBITDA margin dropped by 8.3 percentage points over the last few years as the company focused on expansion rather than profitability
- Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 109% annually
- Increased cash burn over the last few years raises questions about the return timeline for its investments
At $230 per share, Take-Two trades at 19.4x forward EV/EBITDA. To fully understand why you should be careful with TTWO, check out our full research report (it’s free).
Starwood Property Trust (STWD)
Consensus Price Target: $21.43 (7.1% implied return)
With a diverse portfolio spanning commercial properties, residential mortgages, infrastructure loans, and real estate servicing, Starwood Property Trust (NYSE: STWD) is a real estate investment trust that originates, acquires, and manages commercial mortgages, residential loans, and other real estate investments.
Why Do We Think STWD Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.5% annually over the last two years
- Annual tangible book value per share declines of 3.8% for the past two years show its capital management struggled during this cycle
- Annual interest expenses are high relative to its profits, increasing the probability of its failure to meet certain borrowing obligations
Starwood Property Trust’s stock price of $20.00 implies a valuation ratio of 1.1x forward P/B. Read our free research report to see why you should think twice about including STWD in your portfolio.
Rocket Companies (RKT)
Consensus Price Target: $13.86 (0.7% implied return)
Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.
Why Do We Think Twice About RKT?
- Annual sales declines of 4% for the past five years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- High net-debt-to-EBITDA ratio of 12× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Rocket Companies is trading at $13.77 per share, or 3x forward P/B. Check out our free in-depth research report to learn more about why RKT doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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).
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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
