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3 of Wall Street’s Favorite Stocks with Warning Signs

WDAY Cover Image

Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.

Workday (WDAY)

Consensus Price Target: $186.49 (23.5% implied return)

Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ: WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.

Why Does WDAY Give Us Pause?

  1. ARR growth averaged a weak 12.5% over the last year, suggesting that competition is pulling some attention away from its software
  2. Estimated sales growth of 11.5% for the next 12 months implies demand will slow from its two-year trend
  3. Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient

Workday is trading at $150.98 per share, or 3.6x forward price-to-sales. If you’re considering WDAY for your portfolio, see our FREE research report to learn more.

MGP Ingredients (MGPI)

Consensus Price Target: $28.80 (53.3% implied return)

Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry

Why Do We Think MGPI Will Underperform?

  1. Products have few die-hard fans as sales have declined by 11.8% annually over the last three years
  2. Inability to adjust its cost structure while its revenue declined over the last year led to a 28.2 percentage point drop in the company’s operating margin
  3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

At $18.79 per share, MGP Ingredients trades at 11.8x forward P/E. Dive into our free research report to see why there are better opportunities than MGPI.

PVH (PVH)

Consensus Price Target: $96 (47.8% implied return)

Founded in 1881 by a husband and wife duo, PVH (NYSE: PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.

Why Should You Sell PVH?

  1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
  2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.6% for the last two years
  3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

PVH’s stock price of $64.97 implies a valuation ratio of 5.6x forward P/E. To fully understand why you should be careful with PVH, check out our full research report (it’s free).

Stocks We Like More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.

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