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. Keeping that in mind, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
Magnachip (MX)
Consensus Price Target: $5.25 (87.8% implied return)
With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE: MX) is a provider of analog and mixed-signal semiconductors.
Why Should You Sell MX?
- Sales tumbled by 16.3% annually over the last five years, showing market trends are working against its favor during this cycle
- 11.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $2.80 per share, Magnachip trades at 0.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than MX.
Columbus McKinnon (CMCO)
Consensus Price Target: $27.50 (97.4% implied return)
With 19 different brands across the globe, Columbus McKinnon (NASDAQ: CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
Why Do We Steer Clear of CMCO?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Sales over the last two years were less profitable as its earnings per share fell by 9.3% annually while its revenue was flat
- 7.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Columbus McKinnon is trading at $13.93 per share, or 5.3x forward P/E. If you’re considering CMCO for your portfolio, see our FREE research report to learn more.
Lumen (LUMN)
Consensus Price Target: $4.93 (31.2% implied return)
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE: LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Why Should You Dump LUMN?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.5% annually over the last five years
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Free cash flow margin dropped by 9.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Lumen’s stock price of $3.76 implies a valuation ratio of 1.1x forward EV-to-EBITDA. To fully understand why you should be careful with LUMN, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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