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 analysts may be overlooking some important risks.
Two Stocks to Sell:
IPG Photonics (IPGP)
Consensus Price Target: $126.21 (61.2% implied return)
Both a designer and manufacturer of its products, IPG Photonics (NASDAQ: IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials.
Why Do We Think IPGP Will Underperform?
- Sales tumbled by 4.9% annually over the last five years, showing market trends are working against it during this cycle
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 22.8 percentage point drop in the company’s operating margin
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $78.32 per share, IPG Photonics trades at 36.3x forward P/E. Check out our free in-depth research report to learn more about why IPGP doesn’t pass our bar.
Applied Digital (APLD)
Consensus Price Target: $74.23 (173% implied return)
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ: APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Does APLD Give Us Pause?
- Revenue base of $611.3 million indicates it’s still subscale compared to its larger peers (though this creates opportunities to expand into untapped markets)
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Applied Digital’s stock price of $27.20 implies a valuation ratio of 32x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than APLD.
One Stock to Buy:
Clover Health (CLOV)
Consensus Price Target: $5.17 (22.6% implied return)
Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ: CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.
Why Will CLOV Beat the Market?
- Market share has increased this cycle as its 36.9% annual revenue growth over the last two years was exceptional
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 15.2% annually
- Free cash flow turned positive over the last five years, indicating the company has achieved financial self-sustainability
Clover Health is trading at $4.21 per share, or 28.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
