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 are two stocks where you should be greedy instead of fearful and one facing legitimate challenges.
One Stock to Sell:
PennyMac Mortgage Investment Trust (PMT)
Consensus Price Target: $13.36 (6.5% implied return)
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE: PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Do We Think PMT Will Underperform?
- Annual sales declines of 23.1% for the past five years show its products and services struggled to connect with the market during this cycle
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 22% annually, worse than its revenue
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 5.4% annually over the last five years
PennyMac Mortgage Investment Trust’s stock price of $12.54 implies a valuation ratio of 0.8x forward P/B. Read our free research report to see why you should think twice about including PMT in your portfolio.
Two Stocks to Watch:
MACOM (MTSI)
Consensus Price Target: $255.73 (4.7% implied return)
Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
Why Are We Fans of MTSI?
- Impressive 27.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Offerings are mission-critical for businesses and lead to a top-tier gross margin of 54.5%
- Earnings per share grew by 22.2% annually over the last five years, comfortably beating the peer group average
MACOM is trading at $244.30 per share, or 51.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Lennox (LII)
Consensus Price Target: $555.69 (-1.9% implied return)
Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Why Do We Like LII?
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share buybacks catapulted its annual earnings per share growth to 17.9%, which outperformed its revenue gains over the last five years
- ROIC punches in at 48.7%, illustrating management’s expertise in identifying profitable investments
At $566.65 per share, Lennox trades at 23.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
