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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock where you should be greedy instead of fearful and two where the outlook is warranted.
Two Stocks to Sell:
KB Home (KBH)
Consensus Price Target: $55.15 (3.1% implied return)
The first homebuilder to be listed on the NYSE, KB Home (NYSE: KBH) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
Why Is KBH Risky?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 28% decline in its backlog
- Earnings per share have dipped by 13.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
KB Home’s stock price of $53.50 implies a valuation ratio of 16.1x forward P/E. Check out our free in-depth research report to learn more about why KBH doesn’t pass our bar.
Selective Insurance Group (SIGI)
Consensus Price Target: $92.43 (0.2% implied return)
Founded in 1926 during the early days of automobile insurance, Selective Insurance Group (NASDAQ: SIGI) is a property and casualty insurance company that sells commercial, personal, and excess and surplus lines insurance products through independent agents.
Why Does SIGI Fall Short?
- Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
- Efficiency has decreased over the last five years as its pre-tax profit margin fell by 3.2 percentage points
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 12.6% annually
At $92.26 per share, Selective Insurance Group trades at 1.5x forward P/B. If you’re considering SIGI for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Burlington (BURL)
Consensus Price Target: $367.07 (9% implied return)
Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE: BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.
Why Does BURL Catch Our Eye?
- Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
- Comparable store sales rose by 3.5% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Free cash flow margin grew by 6.4 percentage points over the last year, giving the company more chips to play with
Burlington is trading at $336.73 per share, or 28x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
