In This Article:
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. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
Salesforce (CRM)
Consensus Price Target: $364.09 (25.5% implied return)
Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information such as leads.
Why Does CRM Worry Us?
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Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 12.7% over the last three years was below our standards for the software sector
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Average billings growth of 8.1% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
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Estimated sales growth of 7.6% for the next 12 months implies demand will slow from its three-year trend
Salesforce’s stock price of $290.07 implies a valuation ratio of 6.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CRM.
Advance Auto Parts (AAP)
Consensus Price Target: $40.40 (22.5% implied return)
Founded in Virginia in 1932, Advance Auto Parts (NYSE:AAP) is an auto parts and accessories retailer that sells everything from carburetors to motor oil to car floor mats.
Why Do We Steer Clear of AAP?
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Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
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Operating profits fell over the last year as its sales dropped and it struggled to adjust its fixed costs
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Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Advance Auto Parts is trading at $32.98 per share, or 20.7x forward P/E. Check out our free in-depth research report to learn more about why AAP doesn’t pass our bar.
Dentsply Sirona (XRAY)
Consensus Price Target: $18.14 (10.3% implied return)
With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ:XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.