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 where Wall Street’s excitement appears well-founded and two where consensus estimates seem disconnected from reality.
Two Stocks to Sell:
Boeing (BA)
Consensus Price Target: $185.63 (21.1% implied return)
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE: BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Why Do We Pass on BA?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Boeing is trading at $159.50 per share, or 730.5x forward price-to-earnings. To fully understand why you should be careful with BA, check out our full research report (it’s free).
Zebra (ZBRA)
Consensus Price Target: $420.60 (50.2% implied return)
Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ: ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.
Why Do We Think ZBRA Will Underperform?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 12.1% annually, worse than its revenue
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $240.43 per share, Zebra trades at 14x forward price-to-earnings. Check out our free in-depth research report to learn more about why ZBRA doesn’t pass our bar.
One Stock to Buy:
Comfort Systems (FIX)
Consensus Price Target: $545 (37.7% implied return)
Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.
Why Is FIX a Top Pick?
- Sales pipeline is in good shape as its backlog averaged 36.3% growth over the past two years
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 66.1% annually, topping its revenue gains
- Improving returns on capital reflect management’s ability to monetize investments
Comfort Systems’s stock price of $357.99 implies a valuation ratio of 20.7x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our in-depth 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 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
