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.
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 facing legitimate challenges.
Two Stocks to Sell:
Greenbrier (GBX)
Consensus Price Target: $44.67 (-11.3% implied return)
Having designed the industry’s first double-decker railcar in the 1980s, Greenbrier (NYSE: GBX) supplies the freight rail transportation industry with railcars and related services.
Why Does GBX Give Us Pause?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 14.1%
- Negative free cash flow raises questions about the return timeline for its investments
Greenbrier’s stock price of $50.35 implies a valuation ratio of 0.6x forward price-to-sales. Read our free research report to see why you should think twice about including GBX in your portfolio.
Borr Drilling (BORR)
Consensus Price Target: $6.14 (3.7% implied return)
Operating one of the world's youngest jack-up fleets with an average age under eight years, Borr Drilling (NYSE: BORR) operates jack-up rigs that drill oil and gas wells in shallow waters up to 400 feet deep for exploration and production companies.
Why Does BORR Fall Short?
- Smaller revenue base of $1.02 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Cash-burning history makes us doubt the long-term viability of its business model
At $5.92 per share, Borr Drilling trades at 7.9x forward EV-to-EBITDA. To fully understand why you should be careful with BORR, check out our full research report (it’s free).
One Stock to Buy:
Vita Coco (COCO)
Consensus Price Target: $72.56 (7.3% implied return)
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.
Why Are We Bullish on COCO?
- Unit sales were phenomenal over the past two years, showing demand is robust and retailers can’t stock enough of its products
- Earnings per share grew by 52.4% annually over the last three years, massively outpacing its peers
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities
Vita Coco is trading at $68 per share, or 37.3x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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