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 likely to meet or exceed Wall Street’s lofty expectations and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
PubMatic (PUBM)
Consensus Price Target: $11.56 (42.5% implied return)
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Do We Steer Clear of PUBM?
- Competitive market dynamics make it difficult to retain customers, leading to a weak 96% net revenue retention rate
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 7.4 percentage points
At $8.11 per share, PubMatic trades at 1.4x forward price-to-sales. Read our free research report to see why you should think twice about including PUBM in your portfolio.
El Pollo Loco (LOCO)
Consensus Price Target: $14.50 (33.9% implied return)
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ: LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
Why Are We Out on LOCO?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Modest revenue base of $480.8 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.7%
El Pollo Loco is trading at $10.83 per share, or 11.8x forward P/E. To fully understand why you should be careful with LOCO, check out our full research report (it’s free).
One Stock to Buy:
DoorDash (DASH)
Consensus Price Target: $259.36 (54.2% implied return)
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE: DASH) operates an on-demand food delivery platform.
Why Is DASH a Good Business?
- Orders have grown by 22% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 931% annually, topping its revenue gains
- Free cash flow margin expanded by 13 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
DoorDash’s stock price of $168.10 implies a valuation ratio of 21x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
