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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
Asure (ASUR)
Consensus Price Target: $14.33 (41.4% implied return)
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ: ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
Why Does ASUR Worry Us?
- 15.1% annual revenue growth over the last three years was slower than its software peers
- Average billings growth of 7.9% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 5.4 percentage points
At $10.14 per share, Asure trades at 2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ASUR.
Lovesac (LOVE)
Consensus Price Target: $31.67 (56.5% implied return)
Known for its oversized, premium beanbags, Lovesac (NASDAQ: LOVE) is a specialty furniture brand selling modular furniture.
Why Are We Wary of LOVE?
- Annual revenue growth of 2.2% over the last two years was below our standards for the consumer discretionary sector
- Free cash flow margin is forecasted to shrink by 1.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Eroding returns on capital suggest its historical profit centers are aging
Lovesac is trading at $20.23 per share, or 45.9x forward P/E. Read our free research report to see why you should think twice about including LOVE in your portfolio.
Methode Electronics (MEI)
Consensus Price Target: $10.50 (48.5% implied return)
Founded in 1946, Methode Electronics (NYSE: MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Why Should You Sell MEI?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Free cash flow margin dropped by 19.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Methode Electronics’s stock price of $7.07 implies a valuation ratio of 10.6x forward P/E. Check out our free in-depth research report to learn more about why MEI doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
