3 Unpopular Stocks We Think Twice About

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.

Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in - to help you find attractive investment candidates backed by unbiased research. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.

Wayfair (W)

Consensus Price Target: $83.17 (-6.3% implied return)

Founded in 2002 by Niraj Shah, Wayfair (NYSE:W) is a leading online retailer of mass-market home goods in the US, UK, Canada, and Germany.

Why Do We Avoid W?

1. Struggled with new customer acquisition as its active customers averaged 1.7% declines
2. Demand has been weak recently as it posted disappointing growth in its average revenue per buyer and struggled to expand its platform
3. High servicing costs result in an inferior gross margin of 30.3% that must be offset through higher volumes

Wayfair is trading at $88.72 per share, or 21.8x forward EV/EBITDA. Check out our free in-depth research report to learn more about why W doesn’t pass our bar.

PepsiCo (PEP)

Consensus Price Target: $152.38 (7.1% implied return)

With a history that goes back more than a century, PepsiCo (NASDAQ:PEP) is a household name in food and beverages today and best known for its flagship soda.

Why Do We Think Twice About PEP?

1. Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Anticipated sales growth of 3.1% for the next year implies demand will be shaky
3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 2.1 percentage points

PepsiCo’s stock price of $142.26 implies a valuation ratio of 17.5x forward P/E. Dive into our free research report to see why there are better opportunities than PEP.

STAAR Surgical (STAA)

Consensus Price Target: $24.63 (-9.9% implied return)

With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ:STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.

Why Do We Steer Clear of STAA?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. 35.2 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. Eroding returns on capital suggest its historical profit centers are aging

At $27.32 per share, STAAR Surgical trades at 131.2x forward P/E. Read our free research report to see why you should think twice about including STAA in your portfolio.

Stocks We Like More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% 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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