1 of Wall Street’s Favorite Stocks to Research Further and 2 Facing Challenges
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 consensus estimates seem disconnected from reality.
Two Stocks to Sell:
Amphastar Pharmaceuticals (AMPH)
Consensus Price Target: $22 (15.7% implied return)
Founded in 1996 and known for its expertise in complex drug formulations, Amphastar Pharmaceuticals (NASDAQ:AMPH) develops and manufactures technically challenging injectable and inhalation medications, including both generic and proprietary pharmaceutical products.
Why Does AMPH Give Us Pause?
- 3% annual revenue growth over the last two years was slower than its healthcare peers
- Revenue base of $720.5 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Costs have risen faster than its revenue over the last two years, causing its adjusted operating margin to decline by 10.7 percentage points
At $19.01 per share, Amphastar Pharmaceuticals trades at 6.6x forward P/E. Check out our free in-depth research report to learn more about why AMPH doesn’t pass our bar.
One Stock to Watch:
Arlo Technologies (ARLO)
Consensus Price Target: $21.40 (66.5% implied return)
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE:ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Why Do We Like ARLO?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 8.4% annual sales growth over the last five years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 54% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 15.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Arlo Technologies is trading at $12.86 per share, or 16.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
