2 of Wall Street’s Favorite Stocks with Exciting Potential and 1 We Avoid
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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. Keeping that in mind, here are two stocks where Wall Street’s excitement appears well-founded and one where consensus estimates seem disconnected from reality.
One Stock to Sell:
Flex (FLEX)
Consensus Price Target: $160.40 (25.1% implied return)
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ:FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Why Are We Wary of FLEX?
- The company has faced growth challenges as its 2.8% annual revenue increases over the last two years fell short of other business services companies
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Diminishing returns on capital suggest its earlier profit pools are drying up
Flex is trading at $128.26 per share, or 29.6x forward P/E. If you’re considering FLEX for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Magnolia Oil & Gas (MGY)
Consensus Price Target: $32.59 (21.6% implied return)
Operating over 600,000 net acres primarily in two distinct South Texas regions, Magnolia Oil & Gas (NYSE:MGY) drills and produces oil, natural gas, and natural gas liquids from South Texas formations.
Why Are We Positive on MGY?
- Annual revenue growth of 18.7% over the last five years was superb and indicates its market share increased during this cycle
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 84.6%
- Strong free cash flow margin of 39.1% enables it to reinvest or return capital consistently
Magnolia Oil & Gas’s stock price of $26.79 implies a valuation ratio of 9.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Patterson-UTI (PTEN)
Consensus Price Target: $13 (34.3% implied return)
Operating 135 Tier-1 super-spec rigs that can handle the industry's most demanding drilling projects, Patterson-UTI (NASDAQ:PTEN) provides contract drilling rigs, hydraulic fracturing, and drill bits to oil and gas operators.
Why Do We Like PTEN?
- Annual revenue growth of 12.5% over the last ten years was superb and indicates its market share increased during this cycle
- Revenue base of $4.66 billion gives it economies of scale and some negotiating power with suppliers
- EBITDA profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
At $9.68 per share, Patterson-UTI trades at 4.9x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.