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. That said, here are two stocks where Wall Street’s excitement appears well-founded and one where consensus estimates seem disconnected from reality.
One Stock to Sell:
Latham (SWIM)
Consensus Price Target: $8.14 (38.5% implied return)
Started as a family business, Latham (NASDAQ: SWIM) is a global designer and manufacturer of in-ground residential swimming pools and related products.
Why Should You Dump SWIM?
- Annual revenue growth of 2% over the last five years was below our standards for the consumer discretionary sector
- Subpar operating margin of 4.2% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Free cash flow margin is forecasted to grow by 1.5 percentage points in the coming year, potentially giving the company more chips to play with
Latham is trading at $5.88 per share, or 26.5x forward P/E. To fully understand why you should be careful with SWIM, check out our full research report (it’s free).
Two Stocks to Watch:
Kirby (KEX)
Consensus Price Target: $166.33 (17.6% implied return)
Transporting goods along all U.S. coasts, Kirby (NYSE: KEX) provides inland and coastal marine transportation services.
Why Does KEX Stand Out?
- Market share has increased this cycle as its 11.1% annual revenue growth over the last five years was exceptional
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 8.9 percentage points over the last five years, giving the company more chips to play with
Kirby’s stock price of $141.48 implies a valuation ratio of 18.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Occidental Petroleum (OXY)
Consensus Price Target: $65.50 (21.8% implied return)
Backed by Warren Buffett's Berkshire Hathaway as a major shareholder, Occidental Petroleum (NYSE: OXY) explores for, develops, and produces oil, natural gas liquids, and natural gas, primarily in the United States and Middle East.
Why Could OXY Be a Winner?
- Annual revenue growth of 6.2% over the last ten years was superb and indicates its market share increased during this cycle
- Enormous revenue base of $21.45 billion provides significant leverage in supplier negotiations
- Strong free cash flow margin of 24% enables it to reinvest or return capital consistently
At $53.79 per share, Occidental Petroleum trades at 8.8x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
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