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. That said, here is one stock where you should be greedy instead of fearful and two where the skepticism is well-placed.
Two Stocks to Sell:
Caterpillar (CAT)
Consensus Price Target: $366.81 (7.2% implied return)
With its iconic yellow machinery working on construction sites, Caterpillar (NYSE:CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.
Why Are We Wary of CAT?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Gross margin of 29% is below its competitors, leaving less money to invest in areas like marketing and R&D
Caterpillar’s stock price of $342.30 implies a valuation ratio of 17.6x forward P/E. To fully understand why you should be careful with CAT, check out our full research report (it’s free).
Verizon (VZ)
Consensus Price Target: $48.07 (9.8% implied return)
Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE:VZ) is a telecom giant providing a range of communications and internet services.
Why Is VZ Risky?
- Customer growth was choppy over the past two years, suggesting that increasing competition is causing challenges in landing new contracts
- Projected 2.2 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $43.77 per share, Verizon trades at 9.3x forward P/E. If you’re considering VZ for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Toast (TOST)
Consensus Price Target: $43.14 (1.1% implied return)
Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE:TOST) provides integrated point-of-sale (POS) hardware, software, and payments solutions for restaurants.
Why Does TOST Stand Out?
- Ability to secure long-term commitments with customers is evident in its 30.4% ARR growth over the last year
- Projected revenue growth of 21.1% for the next 12 months suggests its momentum from the last three years will persist
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
Toast is trading at $42.66 per share, or 4.1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.