3 of Wall Street's Favorite Stocks with Red Flags
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here are three stocks where Wall Street's estimates seem disconnected from reality and some better opportunities to consider.
Consensus Price Target: $31.22 (18.7% implied return)
Best known for its aluminum foil, Reynolds (NASDAQ:REYN) is a household products company whose products focus on food storage, cooking, and waste.
Why Should You Sell REYN?
Shrinking unit sales over the past two years suggest it might have to lower prices to stimulate growth
Demand will likely fall over the next 12 months as Wall Street expects flat revenue
Capital intensity has ramped up over the last year as its free cash flow margin decreased by 4.4 percentage points
At $23.97 per share, Reynolds trades at 13.7x forward price-to-earnings. Read our free research report to see why you should think twice about including REYN in your portfolio, it's free.
Consensus Price Target: $18.06 (3.1% implied return)
Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE:BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.
Why Should You Dump BALY?
Lackluster 4.2% annual revenue growth over the last two years indicates the company is losing ground to competitors
Waning returns on capital from an already weak starting point displays the inefficacy of management's past and current investment decisions
Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Bally's stock price of $15.09 implies a valuation ratio of 1.2x forward EV-to-EBITDA. If you're considering BALY for your portfolio, see our FREE research report to learn more.
Consensus Price Target: $45.63 (47.6% implied return)
Founded in California in 1982, Malibu Boats (NASDAQ:MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Do We Think MBUU Will Underperform?
Performance surrounding its boats sold has lagged its peers
Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 29% annually
Eroding returns on capital from an already low base indicate that management's recent investments are destroying value
Malibu Boats is trading at $26.91 per share, or 8.2x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than MBUU.
Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
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Vox
19 minutes ago
- Vox
The lawsuit seeking to kill Trump's tariffs is back
is a senior correspondent at Vox, where he focuses on the Supreme Court, the Constitution, and the decline of liberal democracy in the United States. He received a JD from Duke University and is the author of two books on the Supreme Court. Three very important tariff-related stories loom over the US economy this month. The first is that, after a few weeks of relative quiet, President Donald Trump is once again threatening to raise tariffs on a whole raft of other nations. According to the New York Times, 'Trump has threatened 25 trading partners with punishing levies on Aug. 1,' including major importers to the United States such as Mexico, Japan, and the European Union. SCOTUS, Explained Get the latest developments on the US Supreme Court from senior correspondent Ian Millhiser. Email (required) Sign Up By submitting your email, you agree to our Terms and Privacy Notice . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. During Trump's brief time back in office, he raised the average effective tariff rate — the average of what all countries must pay to import goods into the US — from 2.5 percent to 16.6 percent, increasing US tariffs nearly sevenfold. If Trump's new tariffs take effect — an uncertain proposition, because Trump's trade policy has been so erratic — the average tariff rate will rise to 20.6 percent. That's the highest rate since 1910. The second story is that, after a brief period when the stock market and the broader US economy seemed to stabilize, inflation rose in June from 2.4 percent to 2.7 percent. Beforehand, US inflation had declined fairly steadily since 2022, when it spiked due to the aftereffects of the Covid-19 pandemic. Products that are particularly exposed to the tariffs, such as furniture and appliances, saw the highest price hikes in June. The delay between Trump's decision to impose high import taxes in the spring, and the onset of induced inflation in June, was widely predicted. After Trump's election, many US companies went on a buying spree, overstocking their inventories with foreign goods in anticipation of Trump's trade war. But those expanded inventories are now starting to run out, and inflation is expected to keep rising. Both of these stories, moreover, are hitting at a terrible time for Trump — at least if he wants his trade war to continue. On July 31, one day before the new round of tariffs are supposed to take effect, a federal appeals court will hear oral arguments on whether Trump's tariffs are illegal and should be struck down. The judges of the United States Court of Appeals for the Federal Circuit, in other words, will hear these arguments while they are surrounded with headlines about an escalating trade war and the harm it is imposing on the US economy. The plaintiffs' legal arguments in this case, known as V.O.S. Selections v. Trump, are quite strong. So strong, in fact, that a bipartisan panel of three judges struck down the tariffs in May — that decision is currently on hold while the Federal Circuit considers the case. The Federal Circuit's hearing is largely an exhibition game before this case reaches the Supreme Court. Ultimately, the fate of the tariffs will almost certainly be decided by the justices, with their Republican supermajority that has thus far shown extraordinary loyalty to Trump. But that doesn't mean that the Federal Circuit's decision is irrelevant. At the very least, the Federal Circuit is likely to determine just how fast the justices will need to weigh in on V.O.S. Selections, and whether the Supreme Court can make this case disappear without having to produce an opinion explaining why. If the Federal Circuit upholds the tariffs, the Supreme Court could potentially end any legal threats to Trump's trade war by simply refusing to hear V.O.S. Selections. Conversely, if the Federal Circuit issues a broad injunction blocking the tariffs, the justices will need to decide very quickly whether to halt that injunction or the tariffs will go away, at least temporarily. The legal arguments against Trump's tariffs, explained Trump relied on a federal law known as the International Emergency Economic Powers Act of 1977 (IEEPA) when he imposed the tariffs that are now before the Federal Circuit. These tariffs include a broad range of import taxes that Trump claims are necessary to combat trade deficits — meaning that Americans buy more goods from many countries than they sell. They also include additional tariffs targeting Canada, Mexico, and China, which Trump claims will somehow help prevent illegal activity such as fentanyl trafficking. The IEEPA permits the president to 'regulate…transactions involving, any property in which any foreign country or a national thereof has any interest,' but this power 'may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared.' The plaintiffs challenging these tariffs raise several statutory arguments. Among other things, they argue that a statute giving Trump the power to 'regulate' trade does not permit him to impose import taxes. They claim that the Canada, Mexico, and China tariffs don't actually do anything to 'deal with' fentanyl. And they argue that trade deficits, which have 'been a consistent feature of the U.S. economy since the mid-1970s' are common and ordinary – not 'unusual and extraordinary' as the IEEPA requires. All of these are plausible statutory arguments — the last argument is particularly strong — and the plaintiffs' case against these tariffs should be a slam dunk under something known as the 'major questions doctrine.' This doctrine, which was recently invented by the Supreme Court's Republican majority, requires Congress to 'speak clearly' before it can give the executive branch the power to make decisions of 'vast 'economic and political significance.'' Related How the Supreme Court put itself in charge of the executive branch According to the Budget Lab at Yale, Trump's tariffs will cost Americans 'the equivalent of an average per household income loss of $2,800 in 2025,' and they will reduce employment by 641,000 jobs. So they are clearly a matter of great economic and political significance. Under the major questions doctrine, that means that any uncertainty about how to read the IEEPA must be resolved against Trump. The strongest argument for the tariffs, meanwhile, is not legal but political. Republicans control six of the nine seats on the Supreme Court, and the major questions doctrine is brand new — it has never been used against any president who isn't named 'Joe Biden.' So it is far from clear whether the Republican justices, who held last year that Trump is allowed to use the powers of the presidency to commit crimes, will actually apply this new constraint on executive power to a president of their party. (Trump's lawyers, for what it is worth, do make legal arguments against applying the major questions doctrine in V.O.S. Selections. Their primary argument is that the doctrine doesn't apply to policy decisions made directly by the president himself, an argument that at least three federal appeals courts have previously rejected.) The Federal Circuit, however, is a highly specialized court that primarily deals with patent law. Patents aren't a particularly polarizing topic — or, at least, they aren't a topic that tends to divide Democrats from Republicans — so Federal Circuit judges tend to be more technocratic than the highly vetted political operatives who are typically appointed to the Supreme Court. For this reason, partisan politics are likely to play less of a role in the Federal Circuit's deliberations over V.O.S. Selections than they will when this case reaches the justices. There are also many prominent voices within the Republican Party that oppose the tariffs. The lead attorney representing many of the plaintiffs is Michael McConnell, a prominent conservative legal scholar who spent seven years as a federal appellate judge after he was appointed by President George W. Bush. At a recent conference hosted by the Federalist Society, a highly influential bar association for right-wing lawyers, several speakers criticized the tariffs. So, even in a Supreme Court that is typically in the tank for Donald Trump, there is a very real chance that these tariffs could fall. The Federal Circuit is likely to determine when the justices have to decide this case Realistically, the Federal Circuit is unlikely to have the final word on the tariffs. If the appeals court blocks the tariffs, Trump's lawyers will race to the Supreme Court seeking a stay of that decision. That said, the Federal Circuit's decision is likely to decide how quickly the justices must take up this case, and whether they need to explain their ultimate decision to support or oppose the tariffs. Broadly speaking, the Federal Circuit could decide this case in one of three ways: First, the appeals court could strike down the tariffs and issue an injunction prohibiting the Trump administration from enforcing them. If that happens, Trump will ask the Supreme Court to block that injunction on its 'shadow docket,' a mix of emergency motions and other matters that the justices decide on an expedited basis. In this scenario, we are likely to know whether the justices support the tariffs or not within a few weeks of the Federal Circuit's decision. At the other end of the spectrum, the Federal Circuit might uphold the tariffs. If that happens, the plaintiffs will ask the Supreme Court to review the case on its merits docket, but that process can take more than a year to resolve. And the Court may refuse to hear the case, which would mean that the tariffs will remain in effect and the justices will likely never have to explain why they sided with Trump. A third option is that the Federal Circuit could rule against the tariffs, but not issue an immediate injunction blocking them. If that happens, the Supreme Court is still likely to take up the case, but it will do so on its merits docket rather than on the fast-moving shadow docket. We will likely have to wait months or longer before the justices show their cards — and the tariffs will likely remain in place during that entire wait.
CNN
21 minutes ago
- CNN
Markets are absolutely booming under Trump. They're about to face a huge test
Six months into President Donald Trump's second term, a quick glance at the stock market might offer a reassuring picture: The S&P 500 just closed above 6,300 points for the first time ever and has notched eight record highs in the past month. If you look at markets halfway into the year, it might be not be apparent that there has been unprecedented trade turmoil, conflict in the Middle East and relentless attacks on the Federal Reserve's independence. The stock market and bitcoin have soared to record highs, while bonds have resumed a steady rally and volatility in oil prices has subsided. Global markets so far this year have been remarkably resilient. The calm mood on Wall Street is an extraordinary change from early April, when the S&P 500 hit its lowest level in over a year and was on the precipice of a bear market after Trump unveiled his initial 'Liberation Day' tariffs. 'Perhaps the move by US stocks off the early-April lows is emblematic of the age-old adage about bull markets often climbing a 'wall of worry,'' Liz Ann Sonders and Kevin Gordon, investment strategists at Charles Schwab, said in a note. 'There is no shortage of things to worry about; but that's the wall markets often climb.' Markets are floating near record highs despite underlying tariff uncertainty. While investors have begun to shrug off a myriad of concerns, US stocks are trading at historically expensive valuations as Trump's self-imposed August 1 tariff deadline approaches. As Trump presses forward with his trade war, markets' momentum will face a tariff test. 'What has held stocks aloft … is the premise that whatever tariff increases come on August 1, they will not be permanent,' Thierry Wizman, global FX and rates strategist at Macquarie Group, said in a note. 'The prospect that 'deals' will be struck thereafter remains a factor, we believe, in keeping traders from selling stocks more aggressively,' Wizman said. Jeff Buchbinder and Adam Turnquist, strategists at LPL Financial, said in a note that the S&P 500's 'unusually sharp and swift 'V-shaped recovery'' from its low point in early April was 'one of the most powerful post-correction rebounds in stock market history.' The ferocity of the market's recovery has raised questions about whether it is supported by fundamentals — or if underlying weakness could arise. While the market experienced bouts of enormous volatility in recent months, stocks continue to push higher. The S&P 500 is up 5.2% since Trump took office. Trump has acknowledged the market's rebound. The president earlier this month told NBC News that 'tariffs have been very well received,' noting that the 'stock market hit a new high.' The 'softening' of initial tariff announcements has 'removed the worst-case scenarios' for outlooks for economic growth and inflation, investors at BlackRock said in a note, which has supported the market's rally. Steve Sosnick, chief strategist at Interactive Brokers trading platform, told CNN that the rally has also been driven by momentum and a fear of missing out. 'Ever since the president's about-face in early April that turned the market around, a lot of money has been made basically by investors assuming that these tariffs will be postponed, renegotiated or otherwise watered down,' Sosnick said. 'And if there's a trade that works very well for people over a long period of time, they're going to keep doing it.' Meanwhile, bitcoin last week surged to a record high above $123,000 as Republicans in Congress pressed forward with landmark legislation to regulate cryptocurrencies. Economists at the consultancy Capital Economics said in a note that they think the 'US economy will weather the global trade war,' enabling the S&P 500 to rise further. However, they said, Trump's 'unpredictable approach' to trade and attacks on the Fed's independence could 'trigger' a downturn in stocks. 'The widespread assumption among market participants still appears to be that the president will not follow through on threats to raise tariffs much further and that Chair Powell will remain in place, but that may prove too optimistic,' they said. The S&P 500 has not posted a gain or loss of more than 1% since June 24. It's a sign that momentum has slowed down. Bitcoin traded around $119,000 as of Tuesday. Megan Horneman, chief investment officer at Verdence Capital Advisors, said she thinks markets might be complacent about potential risks, given stocks are historically expensive. While stocks and bonds have emerged relatively unscathed, one outlier is the US dollar, which has continued a precipitous decline. The US dollar index, which measures the dollar's strength against six major foreign currencies, is down almost 11% since Trump took office. Gold and silver, meanwhile, have continued to serve as hedges against Trump's trade uncertainty. The yellow and silver precious metals have soared 30% and 35% this year, respectively. The rally in recent months has been driven by retail investors, or individuals buying their own stocks, as opposed to Wall Street institutions, according to Venu Krishna, an equity strategist at Barclays. 'Re-risking by institutional money remains muted, making it likely that retail investors were at the helm for the latest leg of the rally,' Krishna said. He estimates retail investors poured more than $50 billion into global stocks across the past month. Investors who bought the dip when markets dropped in April have been rewarded with an extraordinary march to fresh highs. The S&P 500 has gained almost 27% since its low point in April. The tech-heavy Nasdaq Composite has soared almost 37%. The smaller Nasdaq 100 has gone 62 days without crossing below its 20-day moving average, which is the second longest streak on record after a 77-day streak in 1999, according to Jonathan Krinsky, chief markets technician at investment firm BTIG. And Wall Street money that has been on the sidelines has been creeping back into the market. A survey of global fund managers in July by Bank of America showed the biggest surge in 'risk appetite' on record. The survey also showed the most bullish sentiment since February. Ethan Harris, a market watcher and former economist at Bank of America, said in a post on LinkedIn that Trump's tariff announcements could be characterized as 'Trump always tries again,' as opposed to 'Trump always chickens out.' 'His aggressive announcements are a way to test what he can 'get away with,'' Harris said. 'Hence the steady flow of new threats, partial retreats and then more threats.' As stocks hold near record highs as Trump's trade deadline approaches, it remains to be seen whether markets will push back on the president's plan to disrupt international trade. 'The bond vigilantes may or may not have started to make a comeback this year,' Harris said. 'Will the stock market become the trade war vigilante or remain complacent?'
Business Insider
22 minutes ago
- Business Insider
Why investors are eyeing ether as the next big crypto treasury play
As the world's second-largest crypto, ethereum has long operated bitcoin's shadow. Now, it's getting a moment in the spotlight as companies look for new crypto treasury plays beyond the world's largest token. Ether treasury companies are now adding the coin to their balance sheets as a strategic reserve asset. Crypto mining company BitMine Immersion Technologies announced plans to add ethereum to its balance sheet in late June. It's blown past its initial commitment of $250 million and now holds over $1 billion in Ethereum. Investors are loving it. Venture capitalist Peter Thiel, and more recently, Cathie Wood of Ark Invest, have invested in BitMine. The stock is up over 480% year-to-date despite not being profitable. Earlier this week, the ether investment vehicle The Ether Machine announced plans to go public on the Nasdaq via merger with SPAC Dynamix Corporation. The company plans to manage over 400,000 ether, or roughly $1.5 billion. An ethereum arms race is brewing, and a handful of other companies have also adopted an ethereum treasury strategy recently, such as SharpLink Gaming, Bit Digital, and GameSquare. Each of these companies has over $100 million of Ethereum reserves. Tom Lee, Fundstrat co-founder and BitMine chairman, announced a goal of acquiring and staking 5% of the overall ethereum supply. These companies are following Michael Saylor 's Strategy playbook of accumulating digital assets, raising new capital by issuing debt or equity, and then using proceeds to buy more crypto. The recent focus on ethereum among companies looking to replicate Strategy's success is partly to do with the heightened focus on stablecoins. Donald Trump signed the GENIUS Act this month, boosting government support for the fiat-backed cryptos. Ethereum, whose blockchain underpins the top stablecoins, is up 65% in a month, with bullishness rising for the crypto and its proximity to the stablecoin ecosystem. On Monday, the cofounder of The Ether Machine also clarified his firm's strategy, which differentiates from some other crypto treasuries. "We are not a buy-and-hold treasury," Andrew Keys said on Bloomberg Technology on Monday. "We are an institutional vehicle that is generating risk-adjusted returns actively managing ether." The Ether Machine plans to generate yield by staking ether, meaning that the company will commit the ether as collateral to validate transactions on the Ethereum network. "With bitcoin, you have one asset that is moving on that ledger," Keys said. "With Ethereum, you can have and tokenize infinite assets such as stablecoins, real world assets like parcels of land, stocks, bonds, derivatives." The attention to ethereum doesn't mean investors are forgetting about bitcoin, though. Trump Media and Technology Group announced a $2 billion bitcoin purchase on Monday as it seeks to build out its crypto treasury strategy. However, Ethereum has been a hot commodity as stablecoins become more widespread this year thanks to crypto-friendly legislation. Yet, there are still skeptics. Dave Wiesberger, co-founder of crypto algorithmic trading platform CoinRoutes, doesn't think the ethereum enthusiasm and the wave of treasury strategies are entirely justified. "I don't think there's any difference between that and companies buying stocks of other companies, or buying emerging market debt when they think emerging market debt is cheap," Wiesberger told Business Insider. "It's just capitalizing on public imagination to try to get a premium to your stock price." "Is the asset underlying that company one that has significant appreciation potential?" Wiesberger added. To Keys and other ethereum bulls, the answer is yes. "We believe that ethereum is in the earliest innings of the next generation of the internet," Keys said.
