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. That said, 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:
The RealReal (REAL)
Consensus Price Target: $8.73 (62.3% implied return)
Founded by consignment store aficionado Julie Wainwright, The RealReal (NASDAQ: REAL) is an online marketplace for buying and selling secondhand luxury goods.
Why Are We Hesitant About REAL?
- Focus on expanding its platform came at the expense of monetization as its average revenue per user fell by 5.5% annually
- Cash-burning history makes us doubt the long-term viability of its business model
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $5.38 per share, The RealReal trades at 21.4x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than REAL.
Privia Health (PRVA)
Consensus Price Target: $30.35 (32.9% implied return)
Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ: PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.
Why Are We Cautious About PRVA?
- Revenue base of $1.80 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Negative returns on capital show that some of its growth strategies have backfired
Privia Health is trading at $22.83 per share, or 26.8x forward P/E. Check out our free in-depth research report to learn more about why PRVA doesn’t pass our bar.
One Stock to Watch:
Arlo Technologies (ARLO)
Consensus Price Target: $19 (35.7% implied return)
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Why Could ARLO Be a Winner?
- Operating margin profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Additional sales over the last two years increased its profitability as the 193% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin jumped by 19.7 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Arlo Technologies’s stock price of $14 implies a valuation ratio of 22.5x forward P/E. Is now the right time to buy? See for yourself 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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
