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 two stocks where Wall Street’s positive outlook is supported by strong fundamentals and one where its enthusiasm might be excessive.
One Stock to Sell:
Petco (WOOF)
Consensus Price Target: $3.56 (31.3% implied return)
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ: WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Why Do We Avoid WOOF?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Earnings per share fell by 42% annually over the last three years while its revenue was flat, partly because it diluted shareholders
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Petco’s stock price of $2.71 implies a valuation ratio of 13.4x forward P/E. Dive into our free research report to see why there are better opportunities than WOOF.
Two Stocks to Buy:
Remitly (RELY)
Consensus Price Target: $19.86 (50.5% implied return)
With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ: RELY) is an online platform that enables consumers to safely and quickly send money globally.
Why Should You Buy RELY?
- Active Customers have grown by 31.9% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 74.6% outpaced its revenue gains
- Free cash flow margin increased by 24.7 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Remitly is trading at $13.20 per share, or 8.9x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Federal Signal (FSS)
Consensus Price Target: $133.83 (23.8% implied return)
Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE: FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.
Why Are We Backing FSS?
- Annual revenue growth of 12.3% over the past five years was outstanding, reflecting market share gains this cycle
- Projected revenue growth of 15.6% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 27.9% over the last two years outstripped its revenue performance
At $108.11 per share, Federal Signal trades at 23.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
