1 Unpopular Stock That Should Get More Attention and 2 That Underwhelm

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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. That said, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the skepticism is well-placed.

Two Stocks to Sell:

Target (TGT)

Consensus Price Target: $122.10 (1.2% implied return)

With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.

Why Do We Think TGT Will Underperform?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 28%
3. Poor expense management has led to an operating margin of 5.1% that is below the industry average

At $120.66 per share, Target trades at 15x forward P/E. If you’re considering TGT for your portfolio, see our FREE research report to learn more.

Trustmark (TRMK)

Consensus Price Target: $44.38 (3.7% implied return)

Tracing its roots back to 1889 in Mississippi, Trustmark (NASDAQ:TRMK) is a financial services organization providing banking, wealth management, insurance, and mortgage services across five southeastern states.

Why Do We Think Twice About TRMK?

1. Annual net interest income growth of 8.7% over the last five years was below our standards for the banking sector
2. Estimated net interest income growth of 4.8% for the next 12 months implies demand will slow from its five-year trend
3. ROE of 7.1% reflects management’s challenges in identifying attractive investment opportunities

Trustmark’s stock price of $42.80 implies a valuation ratio of 1.1x forward P/B. Read our free research report to see why you should think twice about including TRMK in your portfolio.

One Stock to Watch:

Kirby (KEX)

Consensus Price Target: $139.67 (7.1% implied return)

Transporting goods along all U.S. coasts, Kirby (NYSE:KEX) provides inland and coastal marine transportation services.

Why Do We Like KEX?

1. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Historical investments are beginning to pay off as its returns on capital are growing

Kirby is trading at $130.36 per share, or 19.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

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