1 of Wall Street's Favorite Stock on Our Buy List and 2 We Question

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.

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 is one stock where Wall Street’s excitement appears well-founded and two where analysts may be overlooking some important risks.

Two Stocks to Sell:

Insperity (NSP)

Consensus Price Target: $57.75 (23.6% implied return)

Pioneering the professional employer organization (PEO) industry it helped establish, Insperity (NYSE:NSP) provides human resources outsourcing services to small and medium-sized businesses, handling payroll, benefits, compliance, and HR administration.

Why Is NSP Not Exciting?

1. Sales trends were unexciting over the last two years as its 3.2% annual growth was below the typical business services company
2. Earnings per share fell by 13.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Insperity’s stock price of $46.71 implies a valuation ratio of 18.1x forward P/E. To fully understand why you should be careful with NSP, check out our full research report (it’s free for active Edge members).

Merchants Bancorp (MBIN)

Consensus Price Target: $40 (28.1% implied return)

With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.

Why Does MBIN Worry Us?

1. Net interest margin of 3% reflects its high servicing and capital costs
2. Day-to-day expenses have swelled relative to revenue over the last four years as its efficiency ratio increased by 15.3 percentage points
3. Insufficient tier one capital ratio of 8.6% leaves little margin for error in meeting regulatory liquidity requirements

Merchants Bancorp is trading at $31.22 per share, or 0.8x forward P/B. If you’re considering MBIN for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Paymentus (PAY)

Consensus Price Target: $39 (27.8% implied return)

Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE:PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.

Why Will PAY Outperform?

1. Annual revenue growth of 36.9% over the past two years was outstanding, reflecting market share gains this cycle
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 134% outpaced its revenue gains

At $30.52 per share, Paymentus trades at 43.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our 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).

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

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