Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in - to help you find attractive investment candidates backed by unbiased research. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Lincoln Educational (LINC)
Consensus Price Target: $57.40 (7.7% implied return)
Established in 1946, Lincoln Educational (NASDAQ: LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.
Why Do We Pass on LINC?
- Performance surrounding its enrolled students has lagged its peers
- Negative free cash flow raises questions about the return timeline for its investments
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Lincoln Educational is trading at $53.30 per share, or 62.2x forward P/E. Dive into our free research report to see why there are better opportunities than LINC.
Fortune Brands (FBIN)
Consensus Price Target: $46.64 (-12.4% implied return)
Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE: FBIN) makes plumbing, security, and outdoor living products.
Why Do We Think FBIN Will Underperform?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Earnings per share have contracted by 6% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
Fortune Brands’s stock price of $53.22 implies a valuation ratio of 16.2x forward P/E. To fully understand why you should be careful with FBIN, check out our full research report (it’s free).
Mercury General (MCY)
Consensus Price Target: $120 (8.6% implied return)
Founded in 1961 and maintaining a network of over 6,300 independent agents across the country, Mercury General (NYSE: MCY) is an insurance company that primarily sells automobile insurance policies through independent agents in 11 states, with a strong focus on California.
Why Are We Cautious About MCY?
- Estimated sales growth of 2.1% for the next 12 months implies demand will slow from its two-year trend
- 4.2% annual book value per share growth over the last five years was slower than its insurance peers
- Below-average return on equity indicates management struggled to find compelling investment opportunities
At $110.48 per share, Mercury General trades at 2.1x forward P/B. Check out our free in-depth research report to learn more about why MCY doesn’t pass our bar.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
