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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two facing legitimate challenges.
Two Industrials Stocks to Sell:
Shoals (SHLS)
Consensus Price Target: $10.15 (-1.5% implied return)
Started in Huntsville, Alabama, Shoals (NASDAQ:SHLS) designs and manufactures products that make solar energy systems work more efficiently.
Why Does SHLS Worry Us?
- Sales tumbled by 2.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 27.6% annually, worse than its revenue
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $10.30 per share, Shoals trades at 19.8x forward P/E. Read our free research report to see why you should think twice about including SHLS in your portfolio.
JELD-WEN (JELD)
Consensus Price Target: $2.81 (-3.2% implied return)
Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.
Why Should You Sell JELD?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
JELD-WEN’s stock price of $2.91 implies a valuation ratio of 11.1x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why JELD doesn’t pass our bar.
One Industrials Stock to Watch:
Standex (SXI)
Consensus Price Target: $271.80 (7.1% implied return)
Holding over 500 patents globally, Standex (NYSE:SXI) is a manufacturer and distributor of industrial components for various sectors.
Why Could SXI Be a Winner?
- Offerings are mission-critical for businesses and lead to a top-tier gross margin of 38.8%
- Disciplined cost controls and effective management resulted in a strong long-term operating margin of 15%, and its profits increased over the last five years as it scaled
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 18.1% exceeded its revenue gains over the last five years
Standex is trading at $253.89 per share, or 25.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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