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1 of Wall Street’s Favorite Stocks to Own for Decades and 2 We Brush Off
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 where Wall Street’s excitement appears well-founded and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
PacBio (PACB)
Consensus Price Target: $2.29 (50.4% implied return)
Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ:PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.
Why Is PACB Not Exciting?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 8.2% annually over the last two years
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
PacBio’s stock price of $1.52 implies a valuation ratio of 2.4x forward price-to-sales. Check out our free in-depth research report to learn more about why PACB doesn’t pass our bar.
Centrus Energy (LEU)
Consensus Price Target: $253.25 (30.2% implied return)
Operating the only active U.S. facility licensed to produce high-assay low-enriched uranium (HALEU) for next-generation reactors, Centrus Energy (NYSE:LEU) supplies enriched uranium, the fissile component needed to produce fuel for nuclear power reactors.
Why Do We Avoid LEU?
- Modest revenue base of $473.9 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 32.3% is below its competitors, leaving less money to invest in exploration and production
- Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 46.9 percentage points
Centrus Energy is trading at $194.50 per share, or 52.6x forward P/E. Read our free research report to see why you should think twice about including LEU in your portfolio.
One Stock to Buy:
VSE Corporation (VSEC)
Consensus Price Target: $270 (24.1% implied return)
With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ:VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets.
Why Will VSEC Outperform?
- Annual revenue growth of 28.5% over the past two years was outstanding, reflecting market share gains this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 54.7%
- Earnings per share have massively outperformed its peers over the last two years, increasing by 24.3% annually
At $217.56 per share, VSE Corporation trades at 29x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.