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.
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 are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Pegasystems (PEGA)
Consensus Price Target: $106.12 (3% implied return)
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
Why Are We Hesitant About PEGA?
- Sales trends were unexciting over the last three years as its 8.8% annual growth was well below the typical software company
- Estimated sales growth of 1.2% for the next 12 months implies demand will slow from its three-year trend
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
Pegasystems’s stock price of $103 implies a valuation ratio of 5.8x forward price-to-sales. To fully understand why you should be careful with PEGA, check out our full research report (it’s free).
Lockheed Martin (LMT)
Consensus Price Target: $525.46 (9.3% implied return)
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE:LMT) specializes in defense, space, homeland security, and information technology products.
Why Do We Pass on LMT?
- Sizable revenue base leads to growth challenges as its 3.3% annual revenue increases over the last five years fell short of other industrials companies
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
- Eroding returns on capital suggest its historical profit centers are aging
Lockheed Martin is trading at $480.80 per share, or 17.1x forward P/E. Check out our free in-depth research report to learn more about why LMT doesn’t pass our bar.
Fastly (FSLY)
Consensus Price Target: $6.93 (-16.9% implied return)
Founded in 2011, Fastly (NYSE:FSLY) provides content delivery and edge cloud computing services, enabling enterprises and developers to deliver fast, secure, and scalable digital content and experiences.
Why Should You Dump FSLY?
- Sales trends were unexciting over the last three years as its 14.3% annual growth was below the typical software company
- Gross margin of 54% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $8.34 per share, Fastly trades at 2x forward price-to-sales. If you’re considering FSLY for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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.