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 are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Sotera Health Company (SHC)
Consensus Price Target: $20.44 (6.5% implied return)
With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.
Why Is SHC Not Exciting?
- Revenue base of $1.15 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Estimated sales growth of 4.4% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin shrank by 9.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Sotera Health Company is trading at $19.19 per share, or 20.6x forward P/E. Check out our free in-depth research report to learn more about why SHC doesn’t pass our bar.
GATX (GATX)
Consensus Price Target: $193.75 (9.4% implied return)
Originally founded to ship beer, GATX (NYSE:GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Does GATX Give Us Pause?
- Demand for its offerings was relatively low as its number of active railcars has underwhelmed
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $177.03 per share, GATX trades at 18x forward P/E. Dive into our free research report to see why there are better opportunities than GATX.
Douglas Dynamics (PLOW)
Consensus Price Target: $38.75 (6.1% implied return)
Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE:PLOW) offers snow and ice equipment for the roads and sidewalks.
Why Are We Hesitant About PLOW?
- 1.8% annual revenue growth over the last two years was slower than its industrials peers
- 2.2 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
- Diminishing returns on capital suggest its earlier profit pools are drying up
Douglas Dynamics’s stock price of $36.51 implies a valuation ratio of 15.6x forward P/E. Read our free research report to see why you should think twice about including PLOW in your portfolio.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.