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. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Mondelez (MDLZ)
Consensus Price Target: $74.52 (15.5% implied return)
Founded as Nabisco in 1903, Mondelez (NASDAQ:MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Why Are We Hesitant About MDLZ?
- Flat unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 4.7 percentage points
- Free cash flow margin dropped by 2.3 percentage points over the last year, implying the company became more capital intensive as competition picked up
At $64.54 per share, Mondelez trades at 20.2x forward P/E. Check out our free in-depth research report to learn more about why MDLZ doesn’t pass our bar.
Vestis (VSTS)
Consensus Price Target: $6.14 (0.7% implied return)
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE:VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Should You Sell VSTS?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Performance over the past two years shows each sale was less profitable, as its earnings per share fell by 47.5% annually
- Free cash flow margin dropped by 6 percentage points over the last four years, implying the company became more capital intensive as competition picked up
Vestis is trading at $6.10 per share, or 7.7x forward P/E. Dive into our free research report to see why there are better opportunities than VSTS.
Advanced Energy (AEIS)
Consensus Price Target: $130.80 (-10.3% implied return)
Pioneering technologies for radio frequency power delivery, Advanced Energy (NASDAQ:AEIS) provides power supplies, thermal management systems, and measurement and control instruments for various manufacturing processes.
Why Do We Steer Clear of AEIS?
- Sales tumbled by 8.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Free cash flow margin shrank by 6.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital imply its previous profit engines are losing steam
Advanced Energy’s stock price of $145.90 implies a valuation ratio of 28.8x forward P/E. To fully understand why you should be careful with AEIS, check out our full research report (it’s free).
Stocks We Like More
Trump’s April 2024 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 6 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 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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