1 of Wall Street’s Favorite Stocks with Exciting Potential and 2 Facing Challenges
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 is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
American Airlines (AAL)
Consensus Price Target: $19.60 (44.4% implied return)
One of the ‘Big Four’ airlines in the US, American Airlines (NASDAQ:AAL) is a major global air carrier that serves both business and leisure travelers through its domestic and international flights.
Why Are We Bearish on AAL?
- Sluggish trends in its revenue passenger miles suggest customers aren’t adopting its solutions as quickly as the company hoped
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- High net-debt-to-EBITDA ratio of 9× increases the risk of forced asset sales or dilutive financing if operational performance weakens
American Airlines’s stock price of $13.57 implies a valuation ratio of 8.4x forward P/E. Dive into our free research report to see why there are better opportunities than AAL.
Customers Bancorp (CUBI)
Consensus Price Target: $92.45 (21.5% implied return)
Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE:CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.
Why Does CUBI Worry Us?
- 9.5% annual net interest income growth over the last five years was slower than its banking peers
- Net interest margin of 3.2% is well below other banks, signaling its loans aren’t very profitable
- Incremental sales over the last five years were less profitable as its 4.2% annual earnings per share growth lagged its revenue gains
At $76.09 per share, Customers Bancorp trades at 1.1x forward P/B. Read our free research report to see why you should think twice about including CUBI in your portfolio.
One Stock to Buy:
Talos Energy (TALO)
Consensus Price Target: $18.67 (20.8% implied return)
Operating its own deepwater production facilities with names like Tarantula, Pompano, and Brutus, Talos Energy (NYSE:TALO) explores for and produces oil and natural gas from offshore wells in the Gulf of Mexico and offshore Mexico.
Why Is TALO a Top Pick?
- Market share has increased this cycle as its 16.9% annual revenue growth over the last eight years was exceptional
- Attractive asset base leads to wonderful unit economics and a premier gross margin of 72.4%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Talos Energy is trading at $15.45 per share, or 39x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.