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 likely to meet or exceed Wall Street’s lofty expectations and one where its enthusiasm might be excessive.
One Stock to Sell:
Vital Farms (VITL)
Consensus Price Target: $13.22 (40.7% implied return)
With an emphasis on ethically produced products, Vital Farms (NASDAQ: VITL) specializes in pasture-raised eggs and butter.
Why Do We Pass on VITL?
- Efficiency has decreased over the last year as its operating margin fell by 10.3 percentage points
- Earnings per share fell by 17.2% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin shrank by 13.6 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Vital Farms’s stock price of $9.40 implies a valuation ratio of 13.2x forward EV-to-EBITDA. If you’re considering VITL for your portfolio, see our FREE research report to learn more.
Two Stocks to Buy:
Allison Transmission (ALSN)
Consensus Price Target: $140.73 (19.3% implied return)
Helping build race cars at one point, Allison Transmission (NYSE: ALSN) offers transmissions to original equipment manufacturers and fleet operators.
Why Are We Bullish on ALSN?
- Impressive 18.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.7% exceeded its revenue gains over the last five years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $118 per share, Allison Transmission trades at 10.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Matador Resources (MTDR)
Consensus Price Target: $69.90 (33% implied return)
Operating primarily in the Delaware Basin where multiple oil-bearing layers lie stacked thousands of feet deep, Matador Resources (NYSE: MTDR) explores for, drills, and produces oil and natural gas from underground rock formations in New Mexico and Texas.
Why Will MTDR Outperform?
- Annual revenue growth of 29.5% over the past ten years was outstanding, reflecting market share gains this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 82.3%
- Strong free cash flow margin of 24.8% enables it to reinvest or return capital consistently
Matador Resources is trading at $52.55 per share, or 6.1x forward P/E. Is now a good time to buy? See for yourself in our in-depth 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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
