3 of Wall Street’s Favorite Stocks with Warning Signs
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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Grocery Outlet (GO)
Consensus Price Target: $14.79 (44.8% implied return)
Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ:GO) is a discount grocery store chain that offers substantial discounts on name-brand products.
Why Should You Dump GO?
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 30.3%
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $10.22 per share, Grocery Outlet trades at 12.6x forward P/E. Check out our free in-depth research report to learn more about why GO doesn’t pass our bar.
Bark (BARK)
Consensus Price Target: $2.33 (295% implied return)
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Why Is BARK Risky?
- Muted 9.8% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Bark is trading at $0.59 per share, or 29.5x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BARK in your portfolio.
Zebra (ZBRA)
Consensus Price Target: $350.80 (44.1% implied return)
Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.
Why Does ZBRA Give Us Pause?
- Muted 1.7% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Free cash flow margin shrank by 7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Zebra’s stock price of $243.43 implies a valuation ratio of 14.3x forward P/E. To fully understand why you should be careful with ZBRA, check out our full research report (it’s free for active Edge members).
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.