Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where its enthusiasm might be excessive.
Two Stocks to Sell:
Monro (MNRO)
Consensus Price Target: $25.63 (67% implied return)
Started as a single location in Rochester, New York, Monro (NASDAQ: MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Why Do We Avoid MNRO?
- Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 30.4% annually, worse than its revenue
Monro’s stock price of $15.34 implies a valuation ratio of 26.2x forward P/E. If you’re considering MNRO for your portfolio, see our FREE research report to learn more.
Vulcan Materials (VMC)
Consensus Price Target: $326.43 (22.7% implied return)
Founded in 1909, Vulcan Materials (NYSE: VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Are We Wary of VMC?
- Number of tons shipped has disappointed over the past two years, indicating weak demand for its offerings
- Projected sales growth of 1.4% for the next 12 months suggests sluggish demand
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 25.2%
Vulcan Materials is trading at $265.98 per share, or 28.6x forward P/E. Dive into our free research report to see why there are better opportunities than VMC.
One Stock to Watch:
ServisFirst Bancshares (SFBS)
Consensus Price Target: $93.67 (26.4% implied return)
Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.
Why Do We Like SFBS?
- Annual revenue growth of 14.2% over the last two years was superb and indicates its market share increased during this cycle
- Demand for the next 12 months is expected to accelerate above its five-year trend as Wall Street forecasts robust net interest income growth of 19.2%
- Impressive 13.1% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
At $74.12 per share, ServisFirst Bancshares trades at 1.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
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