Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
Luckily for you, we at StockStory have no conflicts of interest – our sole job is to help you find genuinely promising companies. Keeping that in mind, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where consensus estimates seem disconnected from reality.
Two Stocks to Sell:
Callaway Golf Company (CALY)
Consensus Price Target: $18.22 (21.6% implied return)
Formed between the merger of Callaway and Topgolf, Callaway Golf Company (NYSE:CALY) sells golf equipment and operates technology-driven golf entertainment venues.
Why Is CALY Risky?
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Muted 3.3% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
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Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 11.3% for the last two years
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Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Callaway Golf Company is trading at $14.99 per share, or 20.8x forward P/E. Read our free research report to see why you should think twice about including CALY in your portfolio, it’s free.
ePlus (PLUS)
Consensus Price Target: $111 (38.8% implied return)
Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ:PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.
Why Are We Hesitant About PLUS?
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Sales trends were unexciting over the last two years as its 4.8% annual growth was below the typical business services company
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Performance over the past two years shows its incremental sales were less profitable, as its 3.2% annual earnings per share growth trailed its revenue gains
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2.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $80.00 per share, ePlus trades at 15.1x forward P/E. Dive into our free research report to see why there are better opportunities than PLUS.
One Stock to Buy:
The Bancorp (TBBK)
Consensus Price Target: $72.67 (35.7% implied return)
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
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