3 of Wall Street's Favorite Stocks That Concern Us

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

El Pollo Loco (LOCO)

Consensus Price Target: $14.17 (30.3% implied return)

With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.

Why Is LOCO Risky?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Subscale operations are evident in its revenue base of $480.8 million, meaning it has fewer distribution channels than its larger rivals
3. Anticipated sales growth of 3.7% for the next year implies demand will be shaky

El Pollo Loco is trading at $10.87 per share, or 12.1x forward P/E. Dive into our free research report to see why there are better opportunities than LOCO.

Red Robin (RRGB)

Consensus Price Target: $11.25 (162% implied return)

Known for its bottomless steak fries, Red Robin (NASDAQ:RRGB) is a chain of casual restaurants specializing in burgers and general American fare.

Why Should You Dump RRGB?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Earnings per share have dipped by 19% annually over the past six years, which is concerning because stock prices follow EPS over the long term
3. High net-debt-to-EBITDA ratio of 9× could force the company to raise capital at unfavorable terms if market conditions deteriorate

At $4.29 per share, Red Robin trades at 9.1x forward EV-to-EBITDA. If you’re considering RRGB for your portfolio, see our FREE research report to learn more.

Smith & Wesson (SWBI)

Consensus Price Target: $13.50 (35.1% implied return)

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

Why Should You Sell SWBI?

1. Sales tumbled by 10.2% annually over the last five years, showing consumer trends are working against its favor
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Smith & Wesson’s stock price of $9.99 implies a valuation ratio of 36x forward P/E. Read our free research report to see why you should think twice about including SWBI in your portfolio.

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 6 Stocks for this week. 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-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.