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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Advanced Drainage (WMS)

Consensus Price Target: $154.50 (3.8% implied return)

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE: WMS) provides clean water management solutions to communities across America.

Why Is WMS Not Exciting?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Anticipated sales growth of 1.9% for the next year implies demand will be shaky
3. Earnings per share have dipped by 1.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term

At $148.91 per share, Advanced Drainage trades at 25.5x forward P/E. Dive into our free research report to see why there are better opportunities than WMS.

Parker-Hannifin (PH)

Consensus Price Target: $787.86 (3.8% implied return)

Founded in 1917, Parker Hannifin (NYSE: PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.

Why Does PH Worry Us?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2% over the last two years was below our standards for the industrials sector
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Anticipated sales growth of 3.9% for the next year implies demand will be shaky

Parker-Hannifin is trading at $759 per share, or 26.1x forward P/E. Check out our free in-depth research report to learn more about why PH doesn’t pass our bar.

Hewlett Packard Enterprise (HPE)

Consensus Price Target: $24.98 (6.3% implied return)

Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.

Why Are We Wary of HPE?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.2% for the last five years
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 7.5% annually
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Hewlett Packard Enterprise’s stock price of $23.51 implies a valuation ratio of 10.4x forward P/E. To fully understand why you should be careful with HPE, check out our full research report (it’s free).

Stocks We Like More

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Take advantage of the rebound by checking out our Top 6 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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