1 Unpopular Stock That Should Get More Attention and 2 Facing Challenges

LMT Cover Image

Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.

Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. 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:

Lockheed Martin (LMT)

Consensus Price Target: $476.67 (3.1% implied return)

Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.

Why Do We Avoid LMT?

  1. Backlog growth averaged a weak 7.3% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
  2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 4.9% annually
  3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $462.48 per share, Lockheed Martin trades at 16.4x forward P/E. Check out our free in-depth research report to learn more about why LMT doesn’t pass our bar.

AMN Healthcare Services (AMN)

Consensus Price Target: $20.29 (-4.4% implied return)

With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE: AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.

Why Do We Pass on AMN?

  1. Declining travelers on assignment over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
  2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 8.4% annually
  3. Waning returns on capital imply its previous profit engines are losing steam

AMN Healthcare Services’s stock price of $21.23 implies a valuation ratio of 20.1x forward P/E. If you’re considering AMN for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

UMB Financial (UMBF)

Consensus Price Target: $133 (7% implied return)

With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ: UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.

Why Are We Positive On UMBF?

  1. Impressive 19.7% annual net interest income growth over the last five years indicates it’s winning market share this cycle
  2. Anticipated efficiency ratio improvement of -6.2 percentage points over the next year signals it will gain leverage on its fixed costs and become more productive
  3. Earnings per share grew by 15.3% annually over the last two years and trumped its peers

UMB Financial is trading at $124.30 per share, or 1.3x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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