When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as 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 poised to prove Wall Street wrong and two where the outlook is warranted.
Two Stocks to Sell:
Herc (HRI)
Consensus Price Target: $168.20 (7.2% implied return)
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.
Why Are We Cautious About HRI?
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 15.2% annually while its revenue grew
- Free cash flow margin shrank by 9.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Herc is trading at $156.87 per share, or 20.3x forward P/E. If you’re considering HRI for your portfolio, see our FREE research report to learn more.
Capital Southwest (CSWC)
Consensus Price Target: $23.58 (9.5% implied return)
Originally founded in 1961 as a venture capital investor that helped launch Texas Instruments, Capital Southwest (NASDAQ:CSWC) is a business development company that provides debt and equity financing to middle-market companies primarily in the United States.
Why Do We Think Twice About CSWC?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 5.5% annually
Capital Southwest’s stock price of $21.53 implies a valuation ratio of 9.5x forward P/E. Read our free research report to see why you should think twice about including CSWC in your portfolio.
One Stock to Watch:
Travelers (TRV)
Consensus Price Target: $297.10 (1.9% implied return)
Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE:TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.
Why Are We Fans of TRV?
- Insurance products connect with policyholders, demonstrated by its above-market 9.2% annual growth in net premiums earned over the last two years
- Annual book value per share growth of 27.3% over the last two years was superb and indicates its capital strength increased during this cycle
- Expected book value per share growth of 21% for the next year suggests its capital position will strengthen considerably
At $291.56 per share, Travelers trades at 2x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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-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.