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.
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. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Intel (INTC)
Consensus Price Target: $22.18 (-9.7% implied return)
Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ:INTC) is a leading manufacturer of computer processors and graphics chips.
Why Should You Sell INTC?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.6% annually over the last five years
- Operating margin declined by 49.2 percentage points over the last five years as its sales cratered
- Free cash flow margin dropped by 39.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Intel’s stock price of $24.57 implies a valuation ratio of 78.6x forward P/E. To fully understand why you should be careful with INTC, check out our full research report (it’s free).
Pegasystems (PEGA)
Consensus Price Target: $62.68 (7.1% implied return)
With a "Center-out Business Architecture" approach that transcends organizational silos, Pegasystems (NASDAQ:PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.
Why Are We Wary of PEGA?
- Annual revenue growth of 11.1% over the last three years was below our standards for the software sector
- Estimated sales growth of 3.6% for the next 12 months implies demand will slow from its three-year trend
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
At $58.53 per share, Pegasystems trades at 6.1x forward price-to-sales. Check out our free in-depth research report to learn more about why PEGA doesn’t pass our bar.
Starwood Property Trust (STWD)
Consensus Price Target: $21.86 (5.8% 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 Should You Dump STWD?
- Sales tumbled by 6% annually over the last two years, showing market trends are working against its favor during this cycle
- Annual net interest income declines of 2.5% for the past four years show its loan book struggled during this cycle
- Annual tangible book value per share declines of 4.1% for the past two years show its capital management struggled during this cycle
Starwood Property Trust is trading at $20.65 per share, or 1.1x forward P/B. If you’re considering STWD 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 5 Strong Momentum 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-small-cap company Comfort Systems (+782% 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
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