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.
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 three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Stitch Fix (SFIX)
Consensus Price Target: $5.06 (28.7% implied return)
One of the original subscription box companies, Stitch Fix (NASDAQ: SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.
Why Should You Sell SFIX?
- Sluggish trends in its active clients suggest customers aren’t adopting its solutions as quickly as the company hoped
- Sales were less profitable over the last five years as its earnings per share fell by 8.1% annually, worse than its revenue declines
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $3.93 per share, Stitch Fix trades at 11.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SFIX.
Denny's (DENN)
Consensus Price Target: $6.55 (48.9% implied return)
Open around the clock, Denny’s (NASDAQ: DENN) is a chain of diner restaurants serving breakfast and traditional American fare.
Why Are We Out on DENN?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Free cash flow margin dropped by 9 percentage points over the last year, implying the company became more capital intensive as competition picked up
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Denny’s stock price of $4.40 implies a valuation ratio of 8.4x forward P/E. If you’re considering DENN for your portfolio, see our FREE research report to learn more.
Energizer (ENR)
Consensus Price Target: $29.63 (39.4% implied return)
Masterminds behind the viral Energizer Bunny mascot, Energizer (NYSE: ENR) is one of the world's largest manufacturers of batteries.
Why Are We Wary of ENR?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Anticipated sales growth of 1.3% for the next year implies demand will be shaky
- Free cash flow margin shrank by 4.6 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Energizer is trading at $21.25 per share, or 5.8x forward P/E. Check out our free in-depth research report to learn more about why ENR doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
