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. Keeping that in mind, here are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Xponential Fitness (XPOF)
Consensus Price Target: $14.30 (73.3% implied return)
Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.
Why Are We Hesitant About XPOF?
- Annual revenue growth of 14.3% over the last two years was below our standards for the consumer discretionary sector
- Poor expense management has led to operating losses
- Push for growth has led to negative returns on capital, signaling value destruction
At $8.25 per share, Xponential Fitness trades at 4.8x forward P/E. Check out our free in-depth research report to learn more about why XPOF doesn’t pass our bar.
Icahn Enterprises (IEP)
Consensus Price Target: $15 (71.4% implied return)
Founded in 1987, Icahn Enterprises (NASDAQ: IEP) is a diversified holding company primarily engaged in investment and asset management across various sectors.
Why Is IEP Risky?
- Sales tumbled by 16% annually over the last two years, showing market trends are working against its favor during this cycle
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.5 percentage points
- 50× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Icahn Enterprises is trading at $8.75 per share, or 0.5x forward price-to-sales. To fully understand why you should be careful with IEP, check out our full research report (it’s free).
AMC Entertainment (AMC)
Consensus Price Target: $3.33 (25.5% implied return)
With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE:AMC) operates movie theaters primarily in the US and Europe.
Why Do We Think AMC Will Underperform?
- Products and services aren't resonating with the market as its revenue declined by 3.3% annually over the last five years
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
AMC Entertainment’s stock price of $2.65 implies a valuation ratio of 1.9x forward EV-to-EBITDA. If you’re considering AMC for your portfolio, see our FREE research report to learn more.
Stocks That Overcame Trump’s 2018 Tariffs
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.