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. That said, 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:
Portillo's (PTLO)
Consensus Price Target: $6 (48.1% implied return)
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ: PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Why Do We Avoid PTLO?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital on unfavorable terms if market conditions deteriorate
At $4.05 per share, Portillo's trades at 18.8x forward P/E. Dive into our free research report to see why there are better opportunities than PTLO.
Two Stocks to Watch:
LegalZoom (LZ)
Consensus Price Target: $7.60 (27.2% implied return)
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ: LZ) offers online legal services and documentation assistance for individuals and businesses.
Why Are We Fans of LZ?
- Has the opportunity to boost monetization through new features and premium offerings as its subscription units have grown by 10.7% annually over the last two years
- Platform’s growing usage and its ability to increase user spending by 17.2% annually showcases its high switching costs
- Highly efficient business model is illustrated by its impressive 23.1% EBITDA margin, and it turbocharged its profits by achieving some fixed cost leverage
LegalZoom’s stock price of $5.98 implies a valuation ratio of 4.3x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Reddit (RDDT)
Consensus Price Target: $213.71 (33.8% implied return)
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Will RDDT Outperform?
- Domestic Daily Active Visitors have increased by an average of 13.2% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Strong engagement trends coupled with 47.1% annual growth in its average revenue per user demonstrate its platform’s stickiness with die-hard customers
- Robust free cash flow margin of 31.8% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy
Reddit is trading at $159.69 per share, or 16.2x forward EV/EBITDA. Is now the right time to buy? Find out in our full 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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
