3 of Wall Street's Favorite Stocks with Questionable Fundamentals

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 are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.

Zevia (ZVIA)

Consensus Price Target: $4.13 (22.4% implied return)

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.

Why Are We Cautious About ZVIA?

1. Muted 2% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
2. Revenue growth over the past three years was nullified by the company’s new share issuances as its earnings per share fell by 27.1% annually
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

Zevia is trading at $3.37 per share, or 1.5x forward price-to-sales. To fully understand why you should be careful with ZVIA, check out our full research report (it’s free).

Smith & Wesson (SWBI)

Consensus Price Target: $12 (44.6% implied return)

With a history dating back to 1852, Smith & Wesson (NASDAQ:SWBI) is a firearms manufacturer known for its handguns and rifles.

Why Do We Think SWBI Will Underperform?

1. Annual revenue declines of 2.2% over the last five years indicate problems with its market positioning
2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 17.7% annually, worse than its revenue
3. Negative free cash flow raises questions about the return timeline for its investments

At $8.30 per share, Smith & Wesson trades at 18.4x forward P/E. Check out our free in-depth research report to learn more about why SWBI doesn’t pass our bar.

CRA (CRAI)

Consensus Price Target: $237.50 (36% implied return)

Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ:CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.

Why Does CRAI Fall Short?

1. Revenue base of $697.5 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Free cash flow margin dropped by 11 percentage points over the last five years, implying the company became more capital intensive as competition picked up

CRA’s stock price of $174.59 implies a valuation ratio of 21.8x forward P/E. Read our free research report to see why you should think twice about including CRAI in your portfolio.

Stocks We Like More

Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 183% over the last five years (as of March 31st 2025).

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