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 its enthusiasm might be excessive.
Two Stocks to Sell:
Portillo's (PTLO)
Consensus Price Target: $6.25 (56.8% implied return)
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ: PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Why Do We Pass on PTLO?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Investment activity picked up over the last year, pressuring its weak free cash flow margin of -0.1%
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Portillo's is trading at $3.99 per share, or 17.5x forward P/E. To fully understand why you should be careful with PTLO, check out our full research report (it’s free).
Kimball Electronics (KE)
Consensus Price Target: $33 (34.5% implied return)
Founded in 1961, Kimball Electronics (NASDAQ: KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Why Is KE Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.1% annually over the last two years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Cash-burning history makes us doubt the long-term viability of its business model
At $24.54 per share, Kimball Electronics trades at 18.4x forward P/E. Check out our free in-depth research report to learn more about why KE doesn’t pass our bar.
One Stock to Buy:
Snap (SNAP)
Consensus Price Target: $7.64 (38.9% implied return)
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Why Are We Backing SNAP?
- Excellent EBITDA margin of 11.9% highlights the efficiency of its business model, and its rise over the last few years was fueled by some leverage on its fixed costs
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 34.6% annually, topping its revenue gains
- Free cash flow margin jumped by 8.8 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Snap’s stock price of $5.50 implies a valuation ratio of 7.8x forward EV/EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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.
