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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. That said, here is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where its enthusiasm might be excessive.
Two Stocks to Sell:
Photronics (PLAB)
Consensus Price Target: $42.33 (26.7% implied return)
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Why Do We Think Twice About PLAB?
- Sales tumbled by 1.4% annually over the last two years, showing market trends are working against it during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.8%
- High input costs result in an inferior gross margin of 35% that must be offset through higher volumes
Photronics is trading at $33.40 per share, or 18.3x forward P/E. If you’re considering PLAB for your portfolio, see our FREE research report to learn more.
Kodiak Gas Services (KGS)
Consensus Price Target: $82.73 (29.8% implied return)
Dominating the Permian Basin with a fleet focused on large horsepower units exceeding 1,000 horsepower each, Kodiak Gas Services (NYSE: KGS) operates compression equipment that maintains natural gas pressure for production, gathering, and transportation.
Why Are We Wary of KGS?
- Revenue base of $1.39 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Expenses have increased as a percentage of revenue over the last five years as its EBITDA margin fell by 2.3 percentage points
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $63.76 per share, Kodiak Gas Services trades at 22.9x forward P/E. To fully understand why you should be careful with KGS, check out our full research report (it’s free).
One Stock to Watch:
Matrix Service (MTRX)
Consensus Price Target: $20 (71.8% implied return)
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Does MTRX Stand Out?
- Projected revenue growth of 12% for the next 12 months indicates demand will rise above its two-year trend
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 58.2% annually, topping its revenue gains
- Free cash flow margin jumped by 8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Matrix Service’s stock price of $11.64 implies a valuation ratio of 16.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
