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.
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 consensus estimates seem disconnected from reality.
Two Stocks to Sell:
Reynolds (REYN)
Consensus Price Target: $26.29 (26.3% 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 Dump REYN?
- Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Sales are projected to be flat over the next 12 months and imply weak demand
- Gross margin of 25.5% is an output of its commoditized products
Reynolds’s stock price of $20.81 implies a valuation ratio of 13.1x forward P/E. To fully understand why you should be careful with REYN, check out our full research report (it’s free).
Coty (COTY)
Consensus Price Target: $3.65 (69.2% implied return)
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Steer Clear of COTY?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 9 percentage points
- Earnings per share have dipped by 14.3% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Coty is trading at $2.16 per share, or 6.6x forward P/E. If you’re considering COTY for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
MercadoLibre (MELI)
Consensus Price Target: $2,607 (58.1% implied return)
Originally started as an online auction platform, MercadoLibre (NASDAQ: MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America.
Why Should You Buy MELI?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 107% annual growth in its average revenue per user
- Share repurchases over the last three years enabled its annual earnings per share growth of 60.4% to outpace its revenue gains
- Strong free cash flow margin of 35.9% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business
At $1,649 per share, MercadoLibre trades at 16.2x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
