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2 of Wall Street’s Favorite Stocks Worth Investigating and 1 Facing Headwinds
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. Keeping that in mind, here are two stocks where Wall Street’s excitement appears well-founded and one where consensus estimates seem disconnected from reality.
One Stock to Sell:
Peabody Energy (BTU)
Consensus Price Target: $30.75 (28.4% implied return)
Beginning with a single wagon hauling coal in Illinois back when Grover Cleveland was president, Peabody Energy (NYSE:BTU) mines coal used by electricity generators and steel manufacturers.
Why Should You Sell BTU?
- Annual sales declines of 1.8% for the past ten years show its products and services struggled to connect with the market during this cycle
- Gross margin of 24.3% reflects its high production costs and unfavorable asset base
- Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 33.3 percentage points
At $23.94 per share, Peabody Energy trades at 21.4x forward P/E. If you’re considering BTU for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
LSI (LYTS)
Consensus Price Target: $30 (48.1% implied return)
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
What Makes LYTS Stand Out?
- Market share has increased this cycle as its 21.2% annual revenue growth over the last two years was exceptional
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 30.7% outpaced its revenue gains
- Free cash flow margin jumped by 7 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
LSI is trading at $20.25 per share, or 14.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Enpro (NPO)
Consensus Price Target: $389.50 (37.2% implied return)
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.
Why Should NPO Be on Your Watchlist?
- Offerings are mission-critical for businesses and lead to a stellar gross margin of 41.1%
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 15.9% annually
- Robust free cash flow margin of 12.8% gives it many options for capital deployment
Enpro’s stock price of $283.81 implies a valuation ratio of 28.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.