3 of Wall Street's Favorite Stocks We Think Twice About

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.

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 may be overlooking some important risks and some alternatives with better fundamentals.

Simply Good Foods (SMPL)

Consensus Price Target: $29.70 (57% implied return)

Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.

Why Do We Think SMPL Will Underperform?

1. Modest revenue base of $1.45 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
2. Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
3. Free cash flow margin dropped by 4.9 percentage points over the last year, implying the company became more capital intensive as competition picked up

At $18.92 per share, Simply Good Foods trades at 9.9x forward P/E. To fully understand why you should be careful with SMPL, check out our full research report (it’s free for active Edge members).

Ruger (RGR)

Consensus Price Target: $44.50 (33.4% implied return)

Founded in 1949, Ruger (NYSE:RGR) is an American manufacturer of firearms for the commercial sporting market.

Why Do We Avoid RGR?

1. Muted 1.4% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.9% for the last two years
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Ruger is trading at $33.36 per share, or 20.9x forward P/E. Read our free research report to see why you should think twice about including RGR in your portfolio.

Baxter (BAX)

Consensus Price Target: $23.80 (27.8% implied return)

With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE:BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.

Why Are We Out on BAX?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 4.3% annually
3. ROIC of 1.2% reflects management’s challenges in identifying attractive investment opportunities

Baxter’s stock price of $18.62 implies a valuation ratio of 8.4x forward P/E. To fully understand why you should be careful with BAX, check out our full research report (it’s free for active Edge members).

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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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