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 excitement appears well-founded and two where its enthusiasm might be excessive.
Two Stocks to Sell:
Chewy (CHWY)
Consensus Price Target: $31.24 (64.9% implied return)
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Are We Cautious About CHWY?
- Annual sales growth of 7.1% over the last three years lagged behind its consumer internet peers as its large revenue base made it difficult to generate incremental demand
- Projected sales growth of 6.8% for the next 12 months suggests sluggish demand
- Bad unit economics and steep infrastructure costs are reflected in its low gross margin of 29.6%
At $18.95 per share, Chewy trades at 7.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than CHWY.
Alarm.com (ALRM)
Consensus Price Target: $59 (32.7% implied return)
Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ: ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.
Why Should You Dump ALRM?
- Offerings struggled to generate meaningful interest as its average billings growth of 8.4% over the last year did not impress
- Estimated sales growth of 3.6% for the next 12 months implies demand will slow from its two-year trend
- Static operating margin over the last year shows it couldn’t become more efficient
Alarm.com is trading at $44.46 per share, or 2.3x forward price-to-sales. Check out our free in-depth research report to learn more about why ALRM doesn’t pass our bar.
One Stock to Buy:
Insulet (PODD)
Consensus Price Target: $242.43 (63.3% implied return)
Revolutionizing diabetes care with its tubeless "Pod" technology, Insulet (NASDAQ: PODD) develops and manufactures innovative insulin delivery systems for people with diabetes, primarily through its Omnipod product line.
Why Will PODD Beat the Market?
- Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
- Free cash flow margin expanded by 25.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are climbing as management makes more lucrative bets
Insulet’s stock price of $148.50 implies a valuation ratio of 21.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
