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.
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 its enthusiasm might be excessive.
Two Stocks to Sell:
Power Integrations (POWI)
Consensus Price Target: $68.80 (22% implied return)
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Should You Sell POWI?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 11.7 percentage points
- Earnings per share have contracted by 2.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
At $56.40 per share, Power Integrations trades at 32.6x forward P/E. Read our free research report to see why you should think twice about including POWI in your portfolio.
Designer Brands (DBI)
Consensus Price Target: $3.50 (51.5% implied return)
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE: DBI) is an American discount retailer focused on footwear and accessories.
Why Should You Dump DBI?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Underwhelming 2.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
- High net-debt-to-EBITDA ratio of 11× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Designer Brands’s stock price of $2.31 implies a valuation ratio of 9.2x forward P/E. If you’re considering DBI for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Adobe (ADBE)
Consensus Price Target: $493.43 (29.2% implied return)
One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ: ADBE) is a leading provider of software as service in the digital design and document management space.
Why Could ADBE Be a Winner?
- Software is difficult to replicate at scale and leads to a best-in-class gross margin of 89.2%
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 36.4%, and its operating leverage amplified its profits over the last year
- ADBE is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Adobe is trading at $381.99 per share, or 6.7x forward 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
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
