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.
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:
Dollar Tree (DLTR)
Consensus Price Target: $117.78 (-5.3% implied return)
A treasure hunt because there’s no guarantee of consistent product selection, Dollar Tree (NASDAQ: DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices.
Why Are We Wary of DLTR?
- Sales tumbled by 11.9% annually over the last three years, showing consumer trends are working against its favor
- Conservative approach to adding new stores shows management is focused on improving existing location performance
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $124.36 per share, Dollar Tree trades at 19.5x forward P/E. Check out our free in-depth research report to learn more about why DLTR doesn’t pass our bar.
CarMax (KMX)
Consensus Price Target: $38.31 (-1.3% implied return)
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE: KMX) is the largest automotive retailer in the United States.
Why Are We Out on KMX?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Gross margin of 11% is below its competitors, leaving less money for marketing and promotions
- High net-debt-to-EBITDA ratio of 16× could force the company to raise capital at unfavorable terms if market conditions deteriorate
CarMax’s stock price of $38.80 implies a valuation ratio of 16.9x forward P/E. Read our free research report to see why you should think twice about including KMX in your portfolio.
One Stock to Buy:
Rollins (ROL)
Consensus Price Target: $64.53 (6.2% implied return)
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE: ROL) provides pest and wildlife control services to residential and commercial customers.
Why Will ROL Outperform?
- Annual revenue growth of 11.5% over the last five years was superb and indicates its market share increased during this cycle
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 52.3%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Rollins is trading at $60.78 per share, or 48.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
