ETFOptimize | High-performance ETF-based Investment Strategies

Quantitative strategies, Wall Street-caliber research, and insightful market analysis since 1998.


ETFOptimize | HOME
Close Window

1 of Wall Street’s Favorite Stock Worth Investigating and 2 to Turn Down

SHLS Cover Image

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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. That said, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where consensus estimates seem disconnected from reality.

Two IndustrialsStocks to Sell:

Shoals (SHLS)

Consensus Price Target: $6.31 (21.8% implied return)

Started in Huntsville, Alabama, Shoals (NASDAQ: SHLS) designs and manufactures products that make solar energy systems work more efficiently.

Why Does SHLS Worry Us?

  1. Average backlog growth of 2.7% over the past two years was mediocre and suggests fewer customers signed long-term contracts
  2. Earnings per share have contracted by 2% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
  3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Shoals is trading at $5.18 per share, or 12x forward P/E. To fully understand why you should be careful with SHLS, check out our full research report (it’s free).

Covenant Logistics (CVLG)

Consensus Price Target: $32 (40.6% implied return)

Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ: CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.

Why Should You Dump CVLG?

  1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3% annually over the last two years
  2. Earnings per share have dipped by 17% annually over the past two years, which is concerning because stock prices follow EPS over the long term
  3. Free cash flow margin dropped by 25 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Covenant Logistics’s stock price of $22.76 implies a valuation ratio of 6.4x forward EV-to-EBITDA. If you’re considering CVLG for your portfolio, see our FREE research report to learn more.

One Industrials Stock to Watch:

SmartRent (SMRT)

Consensus Price Target: $1.65 (89.6% implied return)

Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.

Why Are We Fans of SMRT?

  1. Ability to secure long-term commitments with customers is evident in its 28.5% average ARR growth over the past two years
  2. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 43% annually

At $0.87 per share, SmartRent trades at 1.1x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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 Comfort Systems (+782% 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

Stock Quote API & Stock News API supplied by www.cloudquote.io
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms Of Service.


 

IntelligentValue Home
Close Window

DISCLAIMER

All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security.  All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. We undertake no obligation to update such opinions, analysis or information. You should independently verify all information contained on this website. Some information is based on analysis of past performance or hypothetical performance results, which have inherent limitations. We make no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those shown. Shareholders, employees, writers, contractors, and affiliates associated with ETFOptimize.com may have ownership positions in the securities that are mentioned. If you are not sure if ETFs, algorithmic investing, or a particular investment is right for you, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content are Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Neither ETFOptimize.com, Global Alpha Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any investment losses you may incur as a result of using the information provided herein. Remember that past investment returns may not be indicative of future returns.

Copyright © 1998-2017 ETFOptimize.com, a publication of Optimized Investments, Inc. All rights reserved.