3 Unpopular Stocks We're Skeptical Of

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.

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 where the outlook is warranted and some alternatives with better fundamentals.

AAON (AAON)

Consensus Price Target: $115.25 (7.3% implied return)

Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

Why Is AAON Not Exciting?

1. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 6 percentage points
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 22.7% annually
3. Free cash flow margin shrank by 27.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

AAON is trading at $107.37 per share, or 52.4x forward P/E. To fully understand why you should be careful with AAON, check out our full research report (it’s free for active Edge members).

Champion Homes (SKY)

Consensus Price Target: $87 (3.5% implied return)

Founded in 1951, Champion Homes (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.

Why Do We Think Twice About SKY?

1. Estimated sales growth of 2.6% for the next 12 months implies demand will slow from its two-year trend
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 3.2% annually while its revenue grew
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Champion Homes’s stock price of $84.03 implies a valuation ratio of 23.8x forward P/E. Check out our free in-depth research report to learn more about why SKY doesn’t pass our bar.

IMAX (IMAX)

Consensus Price Target: $37.18 (5.2% implied return)

Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE:IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.

Why Are We Wary of IMAX?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.2% annually over the last two years
2. Modest revenue base of $377.7 million gives it less fixed cost leverage and fewer distribution channels than larger companies
3. ROIC of 1.8% reflects management’s challenges in identifying attractive investment opportunities

At $35.35 per share, IMAX trades at 23.8x forward P/E. Dive into our free research report to see why there are better opportunities than IMAX.

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-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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