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 likely to meet or exceed Wall Street’s lofty expectations and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Dollar General (DG)
Consensus Price Target: $144.18 (40.7% implied return)
Appealing to the budget-conscious consumer, Dollar General (NYSE: DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.
Why Do We Think Twice About DG?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.1% for the last three years
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 30.2% that must be offset through higher volumes
- Earnings per share have dipped by 13.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Dollar General is trading at $103.44 per share, or 14.6x forward P/E. Check out our free in-depth research report to learn more about why DG doesn’t pass our bar.
Tandem Diabetes (TNDM)
Consensus Price Target: $30.52 (118% implied return)
With technology that automatically adjusts insulin delivery based on continuous glucose monitoring data, Tandem Diabetes Care (NASDAQ: TNDM) develops and manufactures automated insulin delivery systems that help people with diabetes manage their blood glucose levels.
Why Do We Think TNDM Will Underperform?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 19.1% annually
- Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Tandem Diabetes’s stock price of $13.95 implies a valuation ratio of 15.5x forward EV-to-EBITDA. To fully understand why you should be careful with TNDM, check out our full research report (it’s free).
One Stock to Buy:
Zscaler (ZS)
Consensus Price Target: $223.16 (28.3% implied return)
Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ: ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.
Why Are We Backing ZS?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 24.3% over the last year
- Projected revenue growth of 20.9% for the next 12 months suggests its momentum from the last two years will persist
- Strong free cash flow margin of 29.1% enables it to reinvest or return capital consistently
At $174 per share, Zscaler trades at 7.7x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month - FREE. Get Our Top 5 Growth 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
