1 Unpopular Stock That Deserves Some Love and 2 We Brush Off

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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.

Two Stocks to Sell:

B&G Foods (BGS)

Consensus Price Target: $4.20 (-2.3% implied return)

Started as a small grocery store in New York City, B&G Foods (NYSE:BGS) is an American packaged foods company with a diverse portfolio of more than 50 brands.

Why Do We Avoid BGS?

1. Annual sales declines of 4.5% for the past three years show its products struggled to connect with the market
2. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 21.4% annually, worse than its revenue
3. 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

B&G Foods’s stock price of $4.30 implies a valuation ratio of 7.8x forward P/E. To fully understand why you should be careful with BGS, check out our full research report (it’s free).

Emerson Electric (EMR)

Consensus Price Target: $155.95 (3.7% implied return)

Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.

Why Is EMR Not Exciting?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 1.4% over the last five years was below our standards for the industrials sector
2. Free cash flow margin shrank by 3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Eroding returns on capital suggest its historical profit centers are aging

Emerson Electric is trading at $150.39 per share, or 22.9x forward P/E. Check out our free in-depth research report to learn more about why EMR doesn’t pass our bar.

One Stock to Buy:

Chart (GTLS)

Consensus Price Target: $206.45 (-0.4% implied return)

Installing the first bulk Co2 tank for McDonalds’s sodas, Chart (NYSE:GTLS) provides equipment to store and transport gasses.

Why Do We Love GTLS?

1. Demand is greater than supply as the company’s 25.6% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
2. Share buybacks catapulted its annual earnings per share growth to 34.6%, which outperformed its revenue gains over the last two years
3. Free cash flow margin jumped by 11.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $207.19 per share, Chart trades at 16.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

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