Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
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 is one stock where Wall Street’s excitement appears well-founded and two where its enthusiasm might be excessive.
Two Stocks to Sell:
Nike (NKE)
Consensus Price Target: $85.52 (42.7% implied return)
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Do We Avoid NKE?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Forecasted revenue decline of 6.3% for the upcoming 12 months implies demand will fall even further
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $54.60 per share, Nike trades at 27.1x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than NKE.
Sabre (SABR)
Consensus Price Target: $4.41 (127% implied return)
Originally a division of American Airlines, Sabre (NASDAQ: SABR) is a technology provider for the global travel and tourism industry.
Why Should You Dump SABR?
- Number of total bookings has disappointed over the past two years, indicating weak demand for its offerings
- Poor free cash flow margin of -0.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Sabre’s stock price of $2.16 implies a valuation ratio of 11.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why SABR doesn’t pass our bar.
One Stock to Buy:
Wabtec (WAB)
Consensus Price Target: $215.51 (21.2% implied return)
Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE: WAB) provides equipment, systems, and related software for the railway industry.
Why Will WAB Outperform?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 10.8% over the past two years
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin expanded by 7.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Wabtec is trading at $172.20 per share, or 19.9x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.
