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 is one stock where you should be greedy instead of fearful and two where the outlook is warranted.
Two Stocks to Sell:
Enact Holdings (ACT)
Consensus Price Target: $49.40 (6.8% implied return)
Playing a critical role in helping first-time homebuyers access the housing market, Enact Holdings (NASDAQ:ACT) provides private mortgage insurance that enables lenders to offer home loans with lower down payments while protecting against borrower defaults.
Why Should You Sell ACT?
- Insurance offerings faced market headwinds this cycle, reflected in stagnant net premiums earned over the last five years
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Earnings per share lagged its peers over the last two years as they only grew by 5.8% annually
Enact Holdings is trading at $46.24 per share, or 1.1x forward P/B. To fully understand why you should be careful with ACT, check out our full research report (it’s free).
HighPeak Energy (HPK)
Consensus Price Target: $10 (-11.9% implied return)
Operating in the oil-rich northeastern corner of the Midland Basin where Howard and Borden counties meet, HighPeak Energy (NASDAQ:HPK) explores for, develops, and produces crude oil, natural gas liquids, and natural gas.
Why Are We Hesitant About HPK?
- Smaller revenue base of $893.8 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Efficiency has decreased over the last five years as its EBITDA margin fell by 18.5 percentage points
- Negative free cash flow raises questions about the return timeline for its investments
HighPeak Energy’s stock price of $11.35 implies a valuation ratio of 41.4x forward P/E. If you’re considering HPK for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Eli Lilly (LLY)
Consensus Price Target: $1,330 (7.1% implied return)
Founded in 1876 by a Civil War veteran and pharmacist frustrated with the poor quality of medicines, Eli Lilly (NYSE:LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Is LLY a Good Business?
- Annual revenue growth of 43.1% over the past two years was outstanding, reflecting market share gains this cycle
- Adjusted operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 31.4% exceeded its revenue gains over the last five years
At $1,241 per share, Eli Lilly trades at 32.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.