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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
BeautyHealth (SKIN)
Consensus Price Target: $1.93 (32% implied return)
Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ: SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.
Why Do We Avoid SKIN?
- Products have few die-hard fans as sales have declined by 4.4% annually over the last three years
- Historical operating margin losses point to an inefficient cost structure
- Earnings per share have contracted by 61.1% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
BeautyHealth’s stock price of $1.47 implies a valuation ratio of 5.2x forward EV-to-EBITDA. If you’re considering SKIN for your portfolio, see our FREE research report to learn more.
Trex (TREX)
Consensus Price Target: $43.58 (26.9% implied return)
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE: TREX) makes wood-alternative decking, railing, and patio furniture.
Why Do We Pass on TREX?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin dropped by 6.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital suggest its historical profit centers are aging
Trex is trading at $34.35 per share, or 21.9x forward P/E. Read our free research report to see why you should think twice about including TREX in your portfolio.
Assured Guaranty (AGO)
Consensus Price Target: $107 (22.1% implied return)
Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty (NYSE: AGO) provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.
Why Do We Steer Clear of AGO?
- 3.6% annual declines in net premiums earned for the past five years indicates policy sales struggled this cycle
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- ROE of 7.8% reflects management’s challenges in identifying attractive investment opportunities
At $87.62 per share, Assured Guaranty trades at 0.7x forward P/B. To fully understand why you should be careful with AGO, check out our full research report (it’s free for active Edge members).
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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