Yahoo Finance

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.

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 are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.

Papa John's (PZZA)

Consensus Price Target: $57.02 (73.7% implied return)

Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.

Why Does PZZA Fall Short?

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. Estimated sales growth of 1.8% for the next 12 months implies demand will slow from its five-year trend

3. Free cash flow margin shrank by 3.8 percentage points over the last year, suggesting the company is consuming more capital to stay competitive

Papa John's is trading at $31.81 per share, or 14x forward price-to-earnings. If you’re considering PZZA for your portfolio, see our FREE research report to learn more.

ChargePoint (CHPT)

Consensus Price Target: $1.98 (169% implied return)

The most prominent EV charging company during the COVID bull market, ChargePoint (NYSE:CHPT) is a provider of electric vehicle charging technology solutions in North America and Europe.

Why Are We Hesitant About CHPT?

1. Sales tumbled by 5.6% annually over the last two years, showing market trends are working against its favor during this cycle

2. Negative free cash flow raises questions about the return timeline for its investments

3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

ChargePoint’s stock price of $0.58 implies a valuation ratio of 0.6x forward price-to-sales. To fully understand why you should be careful with CHPT, check out our full research report (it’s free).

Enviri (NVRI)

Consensus Price Target: $14.75 (173% implied return)

Cooling America’s first indoor ice rink in the 19th century, Enviri (NYSE:NVRI) offers steel and waste handling services.

Why Should You Dump NVRI?

1. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution