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. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
RingCentral (RNG)
Consensus Price Target: $35.70 (-14.1% implied return)
Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE: RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.
Why Is RNG Risky?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 3.8% underwhelmed
- Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its two-year trend
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
RingCentral is trading at $41.55 per share, or 1.4x forward price-to-sales. Check out our free in-depth research report to learn more about why RNG doesn’t pass our bar.
Victoria's Secret (VSCO)
Consensus Price Target: $64.44 (36.1% implied return)
Spun off from L Brands in 2020, Victoria’s Secret (NYSE: VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.
Why Does VSCO Fall Short?
- Annual revenue growth of 1.1% over the last three years was below our standards for the consumer retail sector
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Incremental sales over the last three years were much less profitable as its earnings per share fell by 16.2% annually while its revenue grew
Victoria's Secret’s stock price of $47.36 implies a valuation ratio of 13.5x forward P/E. To fully understand why you should be careful with VSCO, check out our full research report (it’s free).
Peoples Bancorp (PEBO)
Consensus Price Target: $34.83 (9.4% implied return)
Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ: PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.
Why Is PEBO Not Exciting?
- Annual revenue growth of 3.5% over the last two years was below our standards for the banking sector
- Net interest margin dropped by 45.3 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 12.4% annually
At $31.85 per share, Peoples Bancorp trades at 0.9x forward P/B. If you’re considering PEBO for your portfolio, see our FREE research report to learn more.
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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.
