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 are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Red Robin (RRGB)
Consensus Price Target: $11 (64.2% implied return)
Known for its bottomless steak fries, Red Robin (NASDAQ: RRGB) is a chain of casual restaurants specializing in burgers and general American fare.
Why Do We Steer Clear of RRGB?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Performance over the past six years shows each sale was less profitable, as its earnings per share fell by 25.5% annually
- High net-debt-to-EBITDA ratio of 10× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Red Robin’s stock price of $6.70 implies a valuation ratio of 2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including RRGB in your portfolio.
Freshpet (FRPT)
Consensus Price Target: $101.06 (39.4% implied return)
Standing out from typical processed pet foods, Freshpet (NASDAQ: FRPT) is a pet food company whose product portfolio includes natural meals and treats for dogs and cats.
Why Do We Think Twice About FRPT?
- Smaller revenue base of $1.01 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Cash-burning history makes us doubt the long-term viability of its business model
- Negative returns on capital show management lost money while trying to expand the business
Freshpet is trading at $72.48 per share, or 55.1x forward P/E. Check out our free in-depth research report to learn more about why FRPT doesn’t pass our bar.
Global Business Travel (GBTG)
Consensus Price Target: $9.34 (39.9% implied return)
Holding close ties to American Express, Global Business Travel (NYSE: GBTG) is a comprehensive travel and expense management services provider to corporations worldwide.
Why Does GBTG Give Us Pause?
- Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its three-year trend
- High servicing costs result in a relatively inferior gross margin of 60.8% that must be offset through increased usage
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $6.68 per share, Global Business Travel trades at 1.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than GBTG.
Stocks We Like More
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
