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.
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. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Gap (GAP)
Consensus Price Target: $30.06 (5.5% implied return)
Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap (NYSE: GAP) is an apparel and accessories retailer selling casual clothing to men, women, and children.
Why Does GAP Give Us Pause?
- Products have few die-hard fans as sales have declined by 1.3% annually over the last three years
- 2.2 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $28.50 per share, Gap trades at 12.8x forward P/E. Check out our free in-depth research report to learn more about why GAP doesn’t pass our bar.
The Cheesecake Factory (CAKE)
Consensus Price Target: $59.11 (3.2% implied return)
Celebrated for its delicious (and free) brown bread, gigantic portions, and delectable desserts, Cheesecake Factory (NASDAQ: CAKE) is an iconic American restaurant chain that also owns and operates a portfolio of separate restaurant brands.
Why Are We Hesitant About CAKE?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Estimated sales growth of 3.9% for the next 12 months implies demand will slow from its six-year trend
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
The Cheesecake Factory is trading at $57.27 per share, or 14.5x forward P/E. If you’re considering CAKE for your portfolio, see our FREE research report to learn more.
StoneX (SNEX)
Consensus Price Target: $99 (-4.6% implied return)
Originally known as INTL FCStone until its 2020 rebranding, StoneX Group (NASDAQ: SNEX) provides a global financial services network connecting companies, traders, and investors to markets through clearing, execution, and advisory services.
Why Does SNEX Worry Us?
- Annual earnings per share growth of 1.7% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Annual tangible book value per share growth of 6.5% over the last two years lagged behind its financials peers as its large balance sheet made it difficult to generate incremental capital growth
- High debt-to-equity ratio of 7.5× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk
StoneX’s stock price of $103.72 implies a valuation ratio of 1.9x forward P/E. To fully understand why you should be careful with SNEX, check out our full research report (it’s free).
Stocks We Like 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 9 Market-Beating Stocks. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
