The stocks in this article have caught Wall Street’s attention in a big way, with price targets implying returns above 20%. But investors should take these forecasts with a grain of salt because analysts typically say nice things about companies so their firms can win business in other product lines like M&A advisory.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where its enthusiasm might be excessive.
Two Stocks to Sell:
PENN Entertainment (PENN)
Consensus Price Target: $23.08 (62.4% implied return)
Established in 1982, PENN Entertainment (NASDAQ: PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.
Why Should You Sell PENN?
- Lackluster 1.4% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 21.4% annually while its revenue grew
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $14.07 per share, PENN Entertainment trades at 25.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why PENN doesn’t pass our bar.
Bruker (BRKR)
Consensus Price Target: $73.19 (66.6% implied return)
With roots dating back to the pioneering days of nuclear magnetic resonance technology, Bruker (NASDAQ: BRKR) develops and manufactures high-performance scientific instruments that enable researchers and industrial analysts to explore materials at microscopic, molecular, and cellular levels.
Why Are We Hesitant About BRKR?
- Expenses have increased as a percentage of revenue over the last two years as its adjusted operating margin fell by 4.6 percentage points
- 7.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Waning returns on capital imply its previous profit engines are losing steam
Bruker’s stock price of $36.10 implies a valuation ratio of 13.6x forward price-to-earnings. Read our free research report to see why you should think twice about including BRKR in your portfolio.
One Stock to Buy:
Badger Meter (BMI)
Consensus Price Target: $221.87 (14.5% implied return)
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
Why Will BMI Outperform?
- Annual revenue growth of 20% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 36.6% annually over the last two years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Badger Meter is trading at $193 per share, or 42.9x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.
