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 are two stocks where Wall Street’s excitement appears well-founded and one where its enthusiasm might be excessive.
One Stock to Sell:
Paycom (PAYC)
Consensus Price Target: $249.25 (21.6% implied return)
Pioneering the concept of employees doing their own payroll with its "Beti" technology, Paycom (NYSE: PAYC) provides cloud-based human capital management software that helps businesses manage the entire employment lifecycle from recruitment to retirement.
Why Are We Cautious About PAYC?
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.7% average billings growth over the last year was weak
- Estimated sales growth of 9.4% for the next 12 months implies demand will slow from its two-year trend
- Efficiency has decreased over the last year as its operating margin fell by 4.8 percentage points
Paycom’s stock price of $204.93 implies a valuation ratio of 5.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PAYC.
Two Stocks to Watch:
Confluent (CFLT)
Consensus Price Target: $24.59 (21% implied return)
Built by the original creators of Apache Kafka, the popular open-source messaging system, Confluent (NASDAQ: CFLT) provides a data infrastructure platform that enables organizations to connect their applications, systems, and data layers around real-time data streams.
Why Could CFLT Be a Winner?
- Billings growth has averaged 32.6% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Estimated revenue growth of 16.2% for the next 12 months implies its momentum over the last two years will continue
- Adequate gross margin of 74.2% gives it sufficient room to spend on marketing and product development
Confluent is trading at $20.33 per share, or 5.6x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Natera (NTRA)
Consensus Price Target: $193.21 (17.8% implied return)
Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.
Why Do We Love NTRA?
- Products are reaching more customers as its tests processed averaged 21% growth over the past two years
- Adjusted operating margin improvement of 38.7 percentage points over the last two years demonstrates its ability to scale efficiently
- Free cash flow flipped to positive over the last five years, indicating the company has achieved financial self-sustainability
At $164.01 per share, Natera trades at 10.3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "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 9 Market-Beating Stocks. 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 Kadant (+351% 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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