Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here is one stock where Wall Street’s excitement appears well-founded and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
WD-40 (WDFC)
Consensus Price Target: $296 (30.9% 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 Does WDFC Worry Us?
- Annual revenue growth of 5.7% over the last three years was below our standards for the consumer staples sector
- Smaller revenue base of $610.6 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- 10 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
WD-40’s stock price of $226.16 implies a valuation ratio of 39.1x forward price-to-earnings. Read our free research report to see why you should think twice about including WDFC in your portfolio.
Mister Car Wash (MCW)
Consensus Price Target: $9.34 (32.6% implied return)
Formerly known as Hotshine Holdings, Mister Car Wash (NYSE: MCW) offers car washes across the United States through its conveyorized service.
Why Do We Think MCW Will Underperform?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Waning returns on capital imply its previous profit engines are losing steam
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $7.19 per share, Mister Car Wash trades at 17.6x forward price-to-earnings. To fully understand why you should be careful with MCW, check out our full research report (it’s free).
One Stock to Watch:
DoubleVerify (DV)
Consensus Price Target: $22.95 (48.1% implied return)
When Oren Netzer saw a digital ad for US-based Target while sitting in his Tel Aviv apartment, he knew there was an unsolved problem, so he started DoubleVerify (NYSE: DV), a provider of advertising solutions to businesses that helps with ad verification, fraud prevention, and brand safety.
Why Are We Fans of DV?
- Customers use its software daily and increase their spending every year, as seen in its 119% net revenue retention rate
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Excellent operating margin of 12.5% highlights the efficiency of its business model
DoubleVerify is trading at $12.92 per share, or 3x 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
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
