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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. That said, here is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where consensus estimates seem disconnected from reality.
Two Stocks to Sell:
Amtech (ASYS)
Consensus Price Target: $16 (27.1% implied return)
Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ: ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors.
Why Do We Think ASYS Will Underperform?
- Annual sales declines of 20.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Poor free cash flow margin of 6.6% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
At $12.59 per share, Amtech trades at 2.6x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including ASYS in your portfolio.
Hercules Capital (HTGC)
Consensus Price Target: $20.31 (40.8% implied return)
Named after the mythological hero known for his strength, Hercules Capital (NYSE: HTGC) is a business development company that provides debt financing to venture capital-backed and growth-stage technology and life sciences companies.
Why Should You Dump HTGC?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 4.2% annually
Hercules Capital is trading at $14.42 per share, or 8x forward P/E. Check out our free in-depth research report to learn more about why HTGC doesn’t pass our bar.
One Stock to Watch:
PTC (PTC)
Consensus Price Target: $195 (25.4% implied return)
Originally known as Parametric Technology Corporation until its 2013 rebranding, PTC (NASDAQ: PTC) provides software that helps manufacturers design, develop, and service physical products through digital solutions for CAD, PLM, ALM, and SLM.
Why Could PTC Be a Winner?
- Software is difficult to replicate at scale and results in a top-tier gross margin of 84.2%
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Highly efficient business model is illustrated by its impressive 38% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
PTC’s stock price of $155.50 implies a valuation ratio of 6.7x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
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