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. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Seagate Technology (STX)

Consensus Price Target: $163.53 (10.4% implied return)

The developer of the original 5.25inch hard disk drive, Seagate (NASDAQ: STX) is a leading producer of data storage solutions, including hard drives and Solid State Drives (SSDs) used in PCs and data centers.

Why Does STX Fall Short?

1. Annual sales declines of 2.8% for the past five years show its products and services struggled to connect with the market during this cycle
2. High input costs result in an inferior gross margin of 30.4% that must be offset through higher volumes
3. Low free cash flow margin of 9.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Seagate Technology’s stock price of $148.06 implies a valuation ratio of 15.1x forward P/E. To fully understand why you should be careful with STX, check out our full research report (it’s free).

Academy Sports (ASO)

Consensus Price Target: $54.94 (7.7% implied return)

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ: ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Why Are We Cautious About ASO?

1. Annual revenue growth of 3.8% over the last six years was below our standards for the consumer retail sector
2. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3.4 percentage points

Academy Sports is trading at $51.02 per share, or 8.3x forward P/E. Check out our free in-depth research report to learn more about why ASO doesn’t pass our bar.

Cisco (CSCO)

Consensus Price Target: $72.29 (3.3% implied return)

Founded in 1984 by a husband and wife team who wanted computers at Stanford to talk to computers at UC Berkeley, Cisco (NASDAQ: CSCO) designs and sells networking equipment, security solutions, and collaboration tools that help businesses connect their systems and secure their digital operations.

Why Is CSCO Not Exciting?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. 5.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $70 per share, Cisco trades at 17.9x forward P/E. If you’re considering CSCO for your portfolio, see our FREE research report to learn more.

Stocks We Like More

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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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