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.
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 its enthusiasm might be excessive.
Two Stocks to Sell:
Yext (YEXT)
Consensus Price Target: $8.50 (41.9% implied return)
Founded in 2006 by Howard Lerman, Yext (NYSE: YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.
Why Are We Out on YEXT?
- Customers were hesitant to make long-term commitments to its platform as its 4% average ARR growth over the last year was sluggish
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 6.2 percentage points
At $5.99 per share, Yext trades at 1.7x forward price-to-sales. To fully understand why you should be careful with YEXT, check out our full research report (it’s free).
Universal Logistics (ULH)
Consensus Price Target: $44 (37.5% implied return)
Founded in 1932, Universal Logistics (NASDAQ: ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.
Why Do We Steer Clear of ULH?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.3% annually over the last two years
- Earnings per share have dipped by 18.5% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- 11.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Universal Logistics’s stock price of $26.90 implies a valuation ratio of 5.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why ULH doesn’t pass our bar.
One Stock to Buy:
Quanta (PWR)
Consensus Price Target: $346.87 (24.7% implied return)
A construction engineering services company, Quanta (NYSE: PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
Why Is PWR a Good Business?
- Demand is greater than supply as the company’s 23.8% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings per share grew by 18.6% annually over the last two years, massively outpacing its peers
Quanta is trading at $263 per share, or 25.4x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 5 Growth Stocks for this month. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
