3 Unpopular Stocks We Find Risky

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. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.

Procter & Gamble (PG)

Consensus Price Target: $170.64 (7.6% implied return)

Founded by candle maker William Procter and soap maker James Gamble, Proctor & Gamble (NYSE:PG) is a consumer products behemoth whose product portfolio spans everything from facial tissues to laundry detergent to feminine care to men’s grooming.

Why Is PG Not Exciting?

1. Flat unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Estimated sales growth of 2.9% for the next 12 months is soft and implies weaker demand
3. 3 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position

At $158.60 per share, Procter & Gamble trades at 22.6x forward P/E. If you’re considering PG for your portfolio, see our FREE research report to learn more.

Lennar (LEN)

Consensus Price Target: $122.21 (-5.5% implied return)

One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Why Do We Avoid LEN?

1. Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 20.4% declines over the past two years
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 11.2% annually while its revenue grew
3. Free cash flow margin dropped by 13.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Lennar’s stock price of $129.29 implies a valuation ratio of 12.2x forward P/E. To fully understand why you should be careful with LEN, check out our full research report (it’s free).

Encompass Health (EHC)

Consensus Price Target: $135.75 (10% implied return)

With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE:EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.

Why Are We Hesitant About EHC?

1. 4.3% annual revenue growth over the last five years was slower than its healthcare peers
2. 1 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

Encompass Health is trading at $123.43 per share, or 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than EHC.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. 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 Comfort Systems (+782% 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

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