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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Kimball Electronics (KE)
Consensus Price Target: $24 (60.1% implied return)
Founded in 1961, Kimball Electronics (NYSE:KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Why Do We Think KE Will Underperform?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- Poor free cash flow margin of -0.7% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $13.27 per share, Kimball Electronics trades at 8.4x forward price-to-earnings. Read our free research report to see why you should think twice about including KE in your portfolio.
Amentum (AMTM)
Consensus Price Target: $28.33 (31.8% implied return)
With operations spanning approximately 80 countries and a workforce of specialized engineers and technical experts, Amentum Holdings (NYSE:AMTM) provides advanced engineering and technology solutions to U.S. government agencies, allied governments, and commercial enterprises across defense, energy, and space sectors.
Why Is AMTM Risky?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4% over the last two years was below our standards for the business services sector
- Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its two-year trend
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.8% for the last three years
Amentum’s stock price of $18.42 implies a valuation ratio of 8.5x forward price-to-earnings. Check out our free in-depth research report to learn more about why AMTM doesn’t pass our bar.
Accenture (ACN)
Consensus Price Target: $385.11 (27.9% implied return)
With a workforce of approximately 774,000 people serving clients in more than 120 countries, Accenture (NYSE:ACN) is a professional services firm that helps organizations transform their businesses through consulting, technology, operations, and digital services.
Why Does ACN Give Us Pause?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.1% for the last two years
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.2 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Accenture is trading at $281.50 per share, or 21.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ACN.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.