3 of Wall Street's Favorite Stocks with Questionable Fundamentals

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 estimates seem disconnected from reality and some better opportunities to consider.

Skechers (SKX)

Consensus Price Target: $60.74 (25.2% implied return)

Synonymous with "dad shoe", Skechers (NYSE:SKX) is a footwear company renowned for its comfortable, stylish, and affordable shoes for all ages.

Why Do We Avoid SKX?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Estimated sales growth of 7.3% for the next 12 months implies demand will slow from its two-year trend
3. Low free cash flow margin of 4.8% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Skechers is trading at $48.50 per share, or 11.2x forward price-to-earnings. To fully understand why you should be careful with SKX, check out our full research report (it’s free).

EnerSys (ENS)

Consensus Price Target: $109.27 (26.3% implied return)

Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE:ENS) manufactures various kinds of batteries for a range of industries.

Why Are We Cautious About ENS?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Gross margin of 25.3% reflects its high production costs
3. Free cash flow margin dropped by 4.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up

EnerSys’s stock price of $86.51 implies a valuation ratio of 9.1x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ENS.

ManpowerGroup (MAN)

Consensus Price Target: $51.70 (20% implied return)

Founded during the post-World War II economic boom when businesses needed temporary workers, ManpowerGroup (NYSE:MAN) connects millions of people to employment opportunities through its global network of staffing, recruitment, and workforce management services.

Why Should You Dump MAN?

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 are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Sales were less profitable over the last five years as its earnings per share fell by 19.7% annually, worse than its revenue declines

At $43.07 per share, ManpowerGroup trades at 10.3x forward price-to-earnings. Check out our free in-depth research report to learn more about why MAN doesn’t pass our bar.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.