3 Unpopular Stocks That Concern Us

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. That said, here are three stocks where the skepticism is well-placed and some better opportunities to consider.

eXp World (EXPI)

Consensus Price Target: $12 (11.7% implied return)

Founded in 2009, eXp World (NASDAQ:EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.

Why Are We Out on EXPI?

1. Number of transactions has disappointed over the past two years, indicating weak demand for its offerings
2. Poor expense management has led to an operating margin of -0.5% that is below the industry average
3. Incremental sales over the last five years were much less profitable as its earnings per share fell by 12.2% annually while its revenue grew

eXp World is trading at $10.74 per share, or 23.1x forward EV-to-EBITDA. If you’re considering EXPI for your portfolio, see our FREE research report to learn more.

General Motors (GM)

Consensus Price Target: $57.20 (-1.5% implied return)

Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.

Why Does GM Give Us Pause?

1. Disappointing unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
2. 7.9 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
3. High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate

General Motors’s stock price of $58.10 implies a valuation ratio of 6.4x forward P/E. Check out our free in-depth research report to learn more about why GM doesn’t pass our bar.

Bank of Hawaii (BOH)

Consensus Price Target: $70.50 (5.3% implied return)

Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE:BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.

Why Does BOH Fall Short?

1. Net interest income stagnated over the last five years and signal the need for new growth strategies
2. Weak unit economics are reflected in its net interest margin of 2.2%, one of the worst among bank companies
3. Sales were less profitable over the last two years as its earnings per share fell by 15.3% annually, worse than its revenue declines

At $66.93 per share, Bank of Hawaii trades at 1.8x forward P/B. To fully understand why you should be careful with BOH, check out our full research report (it’s free).

Stocks We Like More

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