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. Keeping that in mind, here is one stock poised to prove Wall Street wrong and two where the skepticism is well-placed.
Two Stocks to Sell:
Sally Beauty (SBH)
Consensus Price Target: $12.70 (8.7% implied return)
Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE:SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.
Why Do We Steer Clear of SBH?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Subscale operations are evident in its revenue base of $3.69 billion, meaning it has fewer distribution channels than its larger rivals
- Falling earnings per share over the last six years has some investors worried as stock prices ultimately follow EPS over the long term
Sally Beauty is trading at $11.68 per share, or 6.2x forward P/E. Check out our free in-depth research report to learn more about why SBH doesn’t pass our bar.
Jabil (JBL)
Consensus Price Target: $227.50 (1.6% implied return)
With manufacturing facilities spanning the globe from China to Mexico to the United States, Jabil (NYSE:JBL) provides electronics design, manufacturing, and supply chain solutions to companies across various industries, from healthcare to automotive to cloud computing.
Why Does JBL Fall Short?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 10.1% annually over the last two years
- Earnings per share lagged its peers over the last two years as they only grew by 1.6% annually
- Low free cash flow margin of 3.1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Jabil’s stock price of $224.02 implies a valuation ratio of 22.2x forward P/E. To fully understand why you should be careful with JBL, check out our full research report (it’s free).
One Stock to Buy:
Monolithic Power Systems (MPWR)
Consensus Price Target: $843.23 (4.7% implied return)
Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ:MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.
Why Will MPWR Beat the Market?
- Impressive 17.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $805.25 per share, Monolithic Power Systems trades at 45.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. 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 Exlservice (+354% 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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