
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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Hyster-Yale Materials Handling (HY)
Consensus Price Target: $46 (43.8% implied return)
Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE: HY) designs, manufactures, and sells materials handling equipment to various sectors.
Why Do We Pass on HY?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.5% annually over the last two years
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.1% for the last five years
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
Hyster-Yale Materials Handling is trading at $31.99 per share, or 11.2x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why HY doesn’t pass our bar.
HA Sustainable Infrastructure Capital (HASI)
Consensus Price Target: $49.40 (29.1% implied return)
With a proprietary "CarbonCount" metric that quantifies the environmental impact of each dollar invested, HA Sustainable Infrastructure Capital (NYSE: HASI) is an investment firm that finances and develops climate-positive infrastructure projects across renewable energy, energy efficiency, and ecological restoration.
Why Is HASI Not Exciting?
- Annual earnings per share growth of 9.7% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- ROE of 5.8% reflects management’s challenges in identifying attractive investment opportunities
At $38.26 per share, HA Sustainable Infrastructure Capital trades at 12.8x forward P/E. Dive into our free research report to see why there are better opportunities than HASI.
One Stock to Watch:
IonQ (IONQ)
Consensus Price Target: $67.64 (36.3% implied return)
Founded by quantum physics pioneers from the University of Maryland and Duke University in 2015, IonQ (NYSE: IONQ) develops quantum computers that process information using trapped ions to solve complex computational problems beyond the capabilities of traditional computers.
Why Are We Fans of IONQ?
- Annual revenue growth of 172% over the last two years was superb and indicates its market share increased during this cycle
- Notable projected revenue growth of 53.2% for the next 12 months hints at market share gains
- Adjusted operating margin improvement of 707.5 percentage points over the last five years demonstrates its ability to scale efficiently
IonQ’s stock price of $49.61 implies a valuation ratio of 63.6x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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