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 positive outlook is supported by strong fundamentals and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Accel Entertainment (ACEL)
Consensus Price Target: $15.71 (41.5% implied return)
Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Why Is ACEL Risky?
- Performance surrounding its video gaming terminals sold has lagged its peers
- Poor free cash flow margin of 4.7% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Accel Entertainment’s stock price of $11.11 implies a valuation ratio of 10.4x forward P/E. Dive into our free research report to see why there are better opportunities than ACEL.
Lockheed Martin (LMT)
Consensus Price Target: $627.19 (23.8% implied return)
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.
Why Do We Pass on LMT?
- Annual sales growth of 2.9% over the last five years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Earnings per share were flat over the last two years while its revenue grew, showing its incremental sales were less profitable
- Eroding returns on capital suggest its historical profit centers are aging
At $506.44 per share, Lockheed Martin trades at 16.2x forward P/E. Check out our free in-depth research report to learn more about why LMT doesn’t pass our bar.
One Stock to Watch:
WD-40 (WDFC)
Consensus Price Target: $271.67 (33.4% implied return)
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ: WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Is WDFC on Our Radar?
- Products command premium prices and lead to a premier gross margin of 55.4%
- Robust free cash flow margin of 12.5% gives it many options for capital deployment
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are climbing as it finds even more attractive growth opportunities
WD-40 is trading at $203.70 per share, or 34x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
