3 of Wall Street's Favorite Stocks We Steer Clear Of

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

Smith & Wesson (SWBI)

Consensus Price Target: $12 (23.8% 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 Avoid SWBI?

1. Annual revenue declines of 6.6% over the last five years indicate problems with its market positioning
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Waning returns on capital imply its previous profit engines are losing steam

Smith & Wesson is trading at $9.69 per share, or 8x forward EV-to-EBITDA. If you’re considering SWBI for your portfolio, see our FREE research report to learn more.

IDEX (IEX)

Consensus Price Target: $194.51 (19.9% implied return)

Founded in 1988, IDEX (NYSE:IEX) is a global manufacturer specializing in highly engineered products such as pumps, flow meters, and fluidics systems for various industries.

Why Do We Steer Clear of IEX?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Sales over the last two years were less profitable as its earnings per share fell by 4% annually while its revenue was flat
3. Eroding returns on capital suggest its historical profit centers are aging

IDEX’s stock price of $162.19 implies a valuation ratio of 19x forward P/E. Dive into our free research report to see why there are better opportunities than IEX.

Amentum (AMTM)

Consensus Price Target: $28.22 (23.7% implied return)

With operations spanning approximately 80 countries and a workforce of specialized engineers and technical experts, Amentum Holdings (NYSE:AMTM) provides advanced engineering and technology solutions to U.S. government agencies, allied governments, and commercial enterprises across defense, energy, and space sectors.

Why Does AMTM Give Us Pause?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.8% for the last two years
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.9% for the last four years

At $22.82 per share, Amentum trades at 10x forward P/E. If you’re considering AMTM for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

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Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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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