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 three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Petco (WOOF)
Consensus Price Target: $3.66 (38.7% implied return)
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Why Should You Dump WOOF?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Petco is trading at $2.64 per share, or 19x forward P/E. To fully understand why you should be careful with WOOF, check out our full research report (it’s free).
E.W. Scripps (SSP)
Consensus Price Target: $5.58 (115% implied return)
Founded as a chain of daily newspapers, E.W. Scripps (NASDAQ:SSP) is a diversified media enterprise operating a range of local television stations, national networks, and digital media platforms.
Why Are We Out on SSP?
- Lackluster 1.2% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Projected 8.2 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $2.59 per share, E.W. Scripps trades at 0.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SSP doesn’t pass our bar.
Collegium Pharmaceutical (COLL)
Consensus Price Target: $41.25 (33.1% implied return)
Pioneering abuse-deterrent technology in a field plagued by addiction concerns, Collegium Pharmaceutical (NASDAQ:COLL) develops and markets specialty medications for treating moderate to severe pain, including abuse-deterrent opioid formulations.
Why Are We Cautious About COLL?
- Smaller revenue base of $664.3 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Free cash flow margin dropped by 6.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
Collegium Pharmaceutical’s stock price of $31 implies a valuation ratio of 4.2x forward P/E. If you’re considering COLL for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.