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 two stocks where Wall Street’s excitement appears well-founded and one where consensus estimates seem disconnected from reality.
One Stock to Sell:
Ellington Financial (EFC)
Consensus Price Target: $14.86 (21.3% implied return)
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Why Do We Steer Clear of EFC?
- Performance over the past five years shows its incremental sales were less profitable, as its 4.6% annual earnings per share growth trailed its revenue gains
- Annual tangible book value per share declines of 5.9% for the past five years show its capital management struggled during this cycle
- ROE of 6.7% reflects management’s challenges in identifying attractive investment opportunities
Ellington Financial is trading at $12.25 per share, or 0.9x forward P/B. Check out our free in-depth research report to learn more about why EFC doesn’t pass our bar.
Two Stocks to Buy:
Seagate (STX)
Consensus Price Target: $1,125 (22.8% implied return)
One of two remaining major hard drive manufacturers after decades of industry consolidation, Seagate (NASDAQ: STX) manufactures hard disk drives and solid state drives that store data in data centers, cloud systems, and consumer devices.
Why Is STX a Good Business?
- Market share has increased this cycle as its 36.4% annual revenue growth over the last two years was exceptional
- Operating margin expanded by 16.8 percentage points over the last five years as it scaled and became more efficient
- Free cash flow margin grew by 14.5 percentage points over the last five years, giving the company more chips to play with
Seagate’s stock price of $915.95 implies a valuation ratio of 25.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Charles Schwab (SCHW)
Consensus Price Target: $125.45 (26.5% implied return)
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE: SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Do We Love SCHW?
- Impressive 18.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 40.3% to outpace its revenue gains
- ROE punches in at 15.6%, illustrating management’s expertise in identifying profitable investments
At $99.14 per share, Charles Schwab trades at 13.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
