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.
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. That said, here is one stock where you should be greedy instead of fearful and two where the outlook is warranted.
Two Stocks to Sell:
Valley National Bank (VLY)
Consensus Price Target: $11.42 (6.7% implied return)
Tracing its roots back to 1927 during the economic boom before the Great Depression, Valley National Bancorp (NASDAQGS:VLY) operates Valley National Bank, providing commercial, consumer, and wealth management banking services across several states.
Why Are We Wary of VLY?
- Annual sales declines of 2.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Inferior net interest margin of 2.9% means it must compensate for lower profitability through increased loan originations
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 25% annually, worse than its revenue
At $10.70 per share, Valley National Bank trades at 0.8x forward P/B. If you’re considering VLY for your portfolio, see our FREE research report to learn more.
Capital Southwest (CSWC)
Consensus Price Target: $24 (7% implied return)
Originally founded in 1961 as a venture capital investor that helped launch Texas Instruments, Capital Southwest (NASDAQ: CSWC) is a business development company that provides debt and equity financing to middle-market companies primarily in the United States.
Why Are We Hesitant About CSWC?
- Earnings per share were flat over the last two years while its revenue grew, showing its incremental sales were less profitable
Capital Southwest’s stock price of $22.43 implies a valuation ratio of 9.6x forward P/E. Check out our free in-depth research report to learn more about why CSWC doesn’t pass our bar.
One Stock to Buy:
Axos Financial (AX)
Consensus Price Target: $100.17 (10.9% implied return)
Originally founded as Bank of Internet USA in 1999 before rebranding in 2018, Axos Financial (NYSE: AX) is a diversified financial services company that provides digital banking, securities clearing, and investment advisory solutions to retail and business customers nationwide.
Why Are We Backing AX?
- Annual net interest income growth of 15.9% over the last five years was superb and indicates its market share increased during this cycle
- Differentiated product suite is reflected in its Strong performance of its loan book results in a High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 4.8%
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 18% annually
Axos Financial is trading at $90.29 per share, or 1.6x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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