Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here is one stock where Wall Street’s excitement appears well-founded and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Sonos (SONO)
Consensus Price Target: $15.80 (67.6% implied return)
A pioneer in connected home audio systems, Sonos (NASDAQ: SONO) offers a range of premium wireless speakers and sound systems.
Why Is SONO Risky?
- Annual sales declines of 9.1% for the past two years show its products and services struggled to connect with the market
- Poor expense management has led to operating losses
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 5.8% annually while its revenue grew
Sonos is trading at $8.03 per share, or 13.7x forward price-to-earnings. If you’re considering SONO for your portfolio, see our FREE research report to learn more.
Mayville Engineering (MEC)
Consensus Price Target: $21 (81.7% implied return)
Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE: MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Why Should You Sell MEC?
- Annual revenue growth of 2.3% over the last five years was below our standards for the industrials sector
- High input costs result in an inferior gross margin of 12.5% that must be offset through higher volumes
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 11.2% annually
Mayville Engineering’s stock price of $11.83 implies a valuation ratio of 4.2x forward EV-to-EBITDA. To fully understand why you should be careful with MEC, check out our full research report (it’s free).
One Stock to Watch:
Abercrombie and Fitch (ANF)
Consensus Price Target: $172.28 (85.1% implied return)
Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.
Why Does ANF Stand Out?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 14.6% growth over the past two years
- Share buybacks catapulted its annual earnings per share growth to 76.8%, which outperformed its revenue gains over the last five years
- Strong free cash flow margin of 11.1% enables it to reinvest or return capital consistently
At $71.46 per share, Abercrombie and Fitch trades at 6.4x forward price-to-earnings. Is now a good time to buy? See for yourself in our comprehensive 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 9 Market-Beating Stocks. 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.
