Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
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 three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
Fluence Energy (FLNC)
Consensus Price Target: $7.57 (34.9% implied return)
Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ: FLNC) helps store renewable energy sources with battery systems.
Why Are We Hesitant About FLNC?
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 6.4%
- Investments to defend its competitive moat have ramped up over the last five years as its free cash flow margin decreased by 12 percentage points
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Fluence Energy’s stock price of $5.61 implies a valuation ratio of 13.7x forward P/E. To fully understand why you should be careful with FLNC, check out our full research report (it’s free).
LifeStance Health Group (LFST)
Consensus Price Target: $8.86 (71.6% implied return)
With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ: LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states.
Why Are We Wary of LFST?
- Revenue base of $1.28 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Negative free cash flow raises questions about the return timeline for its investments
- Push for growth has led to negative returns on capital, signaling value destruction
At $5.16 per share, LifeStance Health Group trades at 64.8x forward P/E. Read our free research report to see why you should think twice about including LFST in your portfolio.
Walker & Dunlop (WD)
Consensus Price Target: $100 (49.5% implied return)
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Why Does WD Worry Us?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share fell by 3.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Tangible book value per share tumbled by 3.9% annually over the last five years, showing bank sector trends are working against its favor during this cycle
Walker & Dunlop is trading at $66.91 per share, or 1.3x forward P/B. If you’re considering WD for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 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
