2 of Wall Street’s Favorite Stocks with Exciting Potential and 1 to Steer Clear Of
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 are two stocks likely to meet or exceed Wall Street’s lofty expectations and one where consensus estimates seem disconnected from reality.
One Stock to Sell:
AAR (AIR)
Consensus Price Target: $81.40 (53.9% implied return)
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE:AIR) is a provider of aircraft maintenance services
Why Are We Cautious About AIR?
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Muted 3.9% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
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Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.9% for the last five years
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Low returns on capital reflect management’s struggle to allocate funds effectively
AAR is trading at $52.10 per share, or 12x forward price-to-earnings. Check out our free in-depth research report to learn more about why AIR doesn’t pass our bar .
Two Stocks to Watch:
Fiverr (FVRR)
Consensus Price Target: $35.60 (38.8% implied return)
Based in Tel Aviv, Fiverr (NYSE:FVRR) operates a fixed price global freelance marketplace for digital services.
Why Could FVRR Be a Winner?
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Customers are spending more money on its platform as its average revenue per buyer has increased by 13.8% annually over the last two years
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Prominent and differentiated platform results in a stellar gross margin of 82.4%
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Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 58.6% outpaced its revenue gains
At $24.89 per share, Fiverr trades at 11x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our in-depth research report, it’s free .
Commvault Systems (CVLT)
Consensus Price Target: $175.78 (17.1% implied return)
Originally formed in 1988 as part of Bell Labs, Commvault (NASDAQ: CVLT) provides enterprise software used for data backup and recovery, cloud and infrastructure management, retention, and compliance.
Why Are We Fans of CVLT?
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Ability to secure long-term commitments with customers is evident in its 17.6% ARR growth over the last year
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Prominent and differentiated software leads to a top-tier gross margin of 81.9%
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CVLT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Commvault Systems’s stock price of $152.06 implies a valuation ratio of 6.3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free .
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free .