3 of Wall Street’s Favorite Stocks in Hot Water

StockStory
28 Apr
3 of Wall Street’s Favorite Stocks in Hot Water

Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.

Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. That said, here are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.

Harley-Davidson (HOG)

Consensus Price Target: $34.61 (24.7% implied return)

Founded in 1903, Harley-Davidson (NYSE:HOG) is an American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.

Why Should You Dump HOG?

  1. Sluggish trends in its motorcycles sold suggest customers aren’t adopting its solutions as quickly as the company hoped
  2. Waning returns on capital imply its previous profit engines are losing steam
  3. High net-debt-to-EBITDA ratio of 10× increases the risk of forced asset sales or dilutive financing if operational performance weakens

Harley-Davidson’s stock price of $23.59 implies a valuation ratio of 5.9x forward price-to-earnings. Read our free research report to see why you should think twice about including HOG in your portfolio, it’s free.

Advanced Drainage (WMS)

Consensus Price Target: $162.63 (29.9% implied return)

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America.

Why Does WMS Worry Us?

  1. Annual sales declines of 3.1% for the past two years show its products and services struggled to connect with the market during this cycle
  2. Earnings per share lagged its peers over the last two years as they only grew by 1.7% annually
  3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.2 percentage points

At $111.43 per share, Advanced Drainage trades at 17.1x forward price-to-earnings. If you’re considering WMS for your portfolio, see our FREE research report to learn more.

Limbach (LMB)

Consensus Price Target: $113.33 (15.1% implied return)

Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.

Why Are We Hesitant About LMB?

  1. Annual sales declines of 1.3% for the past five years show its products and services struggled to connect with the market during this cycle
  2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 20.3%
  3. Subpar operating margin of 4.6% constrains its ability to invest in process improvements or effectively respond to new competitive threats

Limbach is trading at $92.97 per share, or 29.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why LMB doesn’t pass our bar.

Stocks We Like 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 9 Market-Beating Stocks. 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.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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