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.
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 is one stock where you should be greedy instead of fearful and two facing legitimate challenges.
Two Stocks to Sell:
Frontdoor (FTDR)
Consensus Price Target: $75.75 (0% implied return)
Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ: FTDR) is a provider of home warranty and service plans.
Why Do We Pass on FTDR?
- 7% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Free cash flow margin is expected to remain in place over the coming year
- Waning returns on capital imply its previous profit engines are losing steam
Frontdoor is trading at $75.73 per share, or 16.3x forward P/E. Check out our free in-depth research report to learn more about why FTDR doesn’t pass our bar.
QCR Holdings (QCRH)
Consensus Price Target: $102 (2% implied return)
With roots dating back to 1993 and a name reflecting its original Quad Cities market, QCR Holdings (NASDAQGM:QCRH) operates four community banks across Iowa and Missouri, providing commercial, consumer banking, and trust services to businesses and individuals.
Why Do We Think Twice About QCRH?
- Muted 8.9% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Estimated net interest income growth of 4.9% for the next 12 months implies demand will slow from its five-year trend
- Costs have risen faster than its revenue over the last five years, causing its efficiency ratio to worsen by 6.3 percentage points
At $100.01 per share, QCR Holdings trades at 1.3x forward P/B. To fully understand why you should be careful with QCRH, check out our full research report (it’s free).
One Stock to Watch:
UMB Financial (UMBF)
Consensus Price Target: $157.77 (6.9% implied return)
With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ: UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.
Why Could UMBF Be a Winner?
- Annual net interest income growth of 21.6% over the past five years was outstanding, reflecting market share gains this cycle
- Net interest margin expanded by 75.2 basis points (100 basis points = 1 percentage point) over the last two years, providing additional flexibility for investments
- Efficiency ratio improvement of -4.5 percentage points is projected for next year as the firm achieves greater operating leverage
UMB Financial’s stock price of $147.64 implies a valuation ratio of 1.3x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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