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. That said, here are three stocks where the skepticism is well-placed and some better opportunities to consider.

General Mills (GIS)

Consensus Price Target: $54.80 (8.3% implied return)

Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE: GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.

Why Does GIS Worry Us?

1. Falling unit sales over the past two years suggest it might have to lower prices to stimulate growth
2. Projected sales decline of 4.2% for the next 12 months points to an even tougher demand environment ahead
3. Earnings growth underperformed the sector average over the last three years as its EPS grew by just 2.2% annually

At $50.62 per share, General Mills trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including GIS in your portfolio.

Kontoor Brands (KTB)

Consensus Price Target: $80.40 (-3.8% implied return)

Founded in 2019 after separating from VF Corporation, Kontoor Brands (NYSE: KTB) is a clothing company known for its high-quality denim products.

Why Do We Think Twice About KTB?

1. Flat sales over the last two years suggest it must innovate and find new ways to grow
2. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Kontoor Brands is trading at $83.56 per share, or 15.4x forward P/E. If you’re considering KTB for your portfolio, see our FREE research report to learn more.

Red Rock Resorts (RRR)

Consensus Price Target: $63.46 (3.8% implied return)

Founded in 1976, Red Rock Resorts (NASDAQ: RRR) operates a range of casino resorts and entertainment properties, primarily in the Las Vegas metropolitan area.

Why Are We Hesitant About RRR?

1. Sales trends were unexciting over the last five years as its 7.1% annual growth was below the typical consumer discretionary company
2. Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
3. Waning returns on capital imply its previous profit engines are losing steam

Red Rock Resorts’s stock price of $61.14 implies a valuation ratio of 36.9x forward P/E. To fully understand why you should be careful with RRR, check out our full research report (it’s free).

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