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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where consensus estimates seem disconnected from reality.
Two Stocks to Sell:
RingCentral (RNG)
Consensus Price Target: $45.40 (29.6% implied return)
Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE: RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.
Why Do We Pass on RNG?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 5.2% underwhelmed
- Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its two-year trend
- Operating margin improvement of 5.3 percentage points over the last year demonstrates its ability to scale efficiently
At $35.02 per share, RingCentral trades at 1.1x forward price-to-sales. To fully understand why you should be careful with RNG, check out our full research report (it’s free).
Semtech (SMTC)
Consensus Price Target: $204.83 (28.7% implied return)
A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.
Why Does SMTC Fall Short?
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 19.2 percentage points
- Free cash flow margin shrank by 8.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
Semtech’s stock price of $159.20 implies a valuation ratio of 53.2x forward P/E. If you’re considering SMTC for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Barrett (BBSI)
Consensus Price Target: $42.25 (27.9% implied return)
Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ: BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions.
Why Could BBSI Be a Winner?
- Annual revenue growth of 7.8% over the last two years beat the sector average and underscores the unique value of its offerings
- Free cash flow margin grew by 6.5 percentage points over the last five years, giving the company more chips to play with
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Barrett is trading at $33.04 per share, or 0.7x trailing 12-month price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
