
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. Keeping that in mind, here are two stocks where you should be greedy instead of fearful and one facing legitimate challenges.
One Stock to Sell:
Brighthouse Financial (BHF)
Consensus Price Target: $65.50 (10.4% implied return)
Spun off from MetLife in 2017 to focus specifically on retail financial products, Brighthouse Financial (NASDAQ: BHF) provides annuity contracts and life insurance products designed to help individuals protect wealth, generate income, and transfer assets.
Why Do We Steer Clear of BHF?
- Insurance offerings face significant market challenges this cycle as net premiums earned contracted by 7.7% annually over the last five years
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 11.1% annually over the last five years
- Debt-to-equity ratio of 1.3× shows the firm has taken on excessive debt, leaving little room for error
Brighthouse Financial’s stock price of $59.36 implies a valuation ratio of 0.7x forward P/B. Read our free research report to see why you should think twice about including BHF in your portfolio.
Two Stocks to Watch:
Teradyne (TER)
Consensus Price Target: $314.18 (6.7% implied return)
Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.
Why Does TER Stand Out?
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 31.5%
- Offerings are difficult to replicate at scale and lead to a stellar gross margin of 58.3%
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $294.50 per share, Teradyne trades at 48.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Pfizer (PFE)
Consensus Price Target: $28.54 (5.6% implied return)
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE: PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Do We Like PFE?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 10.1% over the past two years
- Massive revenue base of $62.58 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Adjusted operating margin improvement of 17.8 percentage points over the last two years demonstrates its ability to scale efficiently
Pfizer is trading at $27.02 per share, or 9.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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