Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here is one stock where Wall Street’s excitement appears well-founded and two where consensus estimates seem disconnected from reality.
Two Stocks to Sell:
Flowserve (FLS)
Consensus Price Target: $62.50 (34.6% implied return)
Manufacturing the largest pump ever built for nuclear power generation, Flowserve (NYSE: FLS) manufactures and sells flow control equipment for various industries.
Why Does FLS Give Us Pause?
- Average backlog growth of 3.6% over the past two years was mediocre and suggests fewer customers signed long-term contracts
- Earnings per share lagged its peers over the last five years as they only grew by 5.9% annually
- Poor free cash flow margin of 4.2% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Flowserve’s stock price of $46.43 implies a valuation ratio of 14.4x forward P/E. Check out our free in-depth research report to learn more about why FLS doesn’t pass our bar.
Illumina (ILMN)
Consensus Price Target: $108.48 (19% implied return)
Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ: ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.
Why Is ILMN Risky?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 8.9% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Illumina is trading at $91.20 per share, or 19.5x forward P/E. If you’re considering ILMN for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Blue Bird (BLBD)
Consensus Price Target: $51.57 (23.5% implied return)
With around a century of experience, Blue Bird (NASDAQ: BLBD) is a manufacturer of school buses and complementary parts.
Why Will BLBD Outperform?
- Market share has increased this cycle as its 16.5% annual revenue growth over the last two years was exceptional
- Additional sales over the last two years increased its profitability as the 156% annual growth in its earnings per share outpaced its revenue
- Improving returns on capital reflect management’s ability to monetize investments
At $41.77 per share, Blue Bird trades at 9.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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 6 Stocks for this week. 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-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
