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. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Akamai (AKAM)
Consensus Price Target: $100.76 (27.2% implied return)
Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.
Why Do We Avoid AKAM?
- Muted 4.5% annual revenue growth over the last three years shows its demand lagged behind its software peers
- Sky-high servicing costs result in an inferior gross margin of 59.1% that must be offset through increased usage
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
Akamai is trading at $79.22 per share, or 2.9x forward price-to-sales. Check out our free in-depth research report to learn more about why AKAM doesn’t pass our bar.
Grid Dynamics (GDYN)
Consensus Price Target: $18.25 (54.1% implied return)
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Why Are We Wary of GDYN?
- Revenue base of $371.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Earnings per share fell by 8.5% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Negative returns on capital show that some of its growth strategies have backfired
At $11.84 per share, Grid Dynamics trades at 30x forward P/E. To fully understand why you should be careful with GDYN, check out our full research report (it’s free).
First American Financial (FAF)
Consensus Price Target: $77 (26% implied return)
Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE:FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.
Why Is FAF Risky?
- Customers purchased fewer policies this cycle as its net premiums earned declined by 4.3% annually over the last four years
- Efficiency has decreased over the last four years as its pre-tax profit margin fell by 11.8 percentage points
- Earnings per share fell by 4.6% annually over the last five years while its revenue was flat, showing each sale was less profitable
First American Financial’s stock price of $61.12 implies a valuation ratio of 1.2x forward P/B. Read our free research report to see why you should think twice about including FAF in your portfolio.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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