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. That said, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.

Two Industrials Stocks to Sell:

Expeditors (EXPD)

Consensus Price Target: $138.93 (-4.6% implied return)

Expeditors (NYSE: EXPD) offers air and ocean freight as well as brokerage services.

Why Are We Cautious About EXPD?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.9% over the last five years was below our standards for the industrials sector
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 13.5%
3. Waning returns on capital imply its previous profit engines are losing steam

At $145.60 per share, Expeditors trades at 24.1x forward P/E. If you’re considering EXPD for your portfolio, see our FREE research report to learn more.

Lennar (LEN)

Consensus Price Target: $108.62 (-1.5% implied return)

One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Why Are We Out on LEN?

1. Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 15.1% declines over the past two years
2. 9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Waning returns on capital imply its previous profit engines are losing steam

Lennar is trading at $110.31 per share, or 16.9x forward P/E. Read our free research report to see why you should think twice about including LEN in your portfolio.

One Industrials Stock to Buy:

ATI (ATI)

Consensus Price Target: $150 (-11% implied return)

With its materials flying in nearly every commercial and military aircraft in service today, ATI (NYSE: ATI) produces highly specialized materials and components for aerospace, defense, medical, and energy applications using advanced metallurgy and manufacturing processes.

Why Are We Backing ATI?

1. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
2. Share repurchases over the last two years enabled its annual earnings per share growth of 19.5% to outpace its revenue gains
3. Free cash flow margin expanded by 12.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

ATI’s stock price of $168.50 implies a valuation ratio of 39.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

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