- LIVE QUOTES
- LEARN
- HELP
Nasdaq
Wall Street JournalEN
1 of Wall Street’s Favorite Stock to Research Further and 2 We Avoid
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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Custom Truck One Source (CTOS)
Consensus Price Target: $7.67 (28.7% implied return)
Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of trucks and heavy equipment.
Why Is CTOS Not Exciting?
- Sales trends were unexciting over the last two years as its 2.9% annual growth was below the typical industrials company
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- 19.4 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
At $5.96 per share, Custom Truck One Source trades at 7.5x forward EV-to-EBITDA. To fully understand why you should be careful with CTOS, check out our full research report (it’s free for active Edge members).
Ziff Davis (ZD)
Consensus Price Target: $43.43 (22.1% implied return)
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Are We Out on ZD?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 2.2% annually
- Free cash flow margin dropped by 14.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Ziff Davis is trading at $35.57 per share, or 4.9x forward P/E. Dive into our free research report to see why there are better opportunities than ZD.
One Stock to Watch:
e.l.f. Beauty (ELF)
Consensus Price Target: $117.21 (45.8% implied return)
Short for "eyes, lips, face", e.l.f. Beauty (NYSE:ELF) is a developer of high-quality beauty products at accessible price points.
Why Does ELF Catch Our Eye?
- Market share has increased over the last three years as its 45.7% annual revenue growth was exceptional
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 40.3% annually
- Free cash flow margin expanded by 8.4 percentage points over the last year, providing additional flexibility for investments and share buybacks/dividends
e.l.f. Beauty’s stock price of $80.40 implies a valuation ratio of 25.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% 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.