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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. That said, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where its enthusiasm might be excessive.
Two Stocks to Sell:
Hillenbrand (HI)
Consensus Price Target: $33 (33.8% implied return)
Hillenbrand, Inc. (NYSE: HI) is an industrial company that designs, manufactures, and sells highly engineered processing equipment and solutions for various industries.
Why Do We Pass on HI?
- Sales trends were unexciting over the last two years as its 3.5% annual growth was below the typical industrials company
- 18.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Hillenbrand is trading at $24.66 per share, or 10.3x forward P/E. Check out our free in-depth research report to learn more about why HI doesn’t pass our bar.
ScanSource (SCSC)
Consensus Price Target: $58 (33% implied return)
Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ:SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.
Why Do We Avoid SCSC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 11.4% annually over the last two years
- Earnings per share have dipped by 3.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
ScanSource’s stock price of $43.62 implies a valuation ratio of 11.5x forward P/E. Dive into our free research report to see why there are better opportunities than SCSC.
One Stock to Watch:
Coherent (COHR)
Consensus Price Target: $113.37 (28.8% implied return)
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE:COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Does COHR Stand Out?
- Annual revenue growth of 19.5% over the last five years was superb and indicates its market share increased during this cycle
- $5.81 billion in revenue allows it to spread its fixed costs across a wider base
- Projected revenue growth of 8.7% for the next 12 months indicates demand will rise above its two-year trend
At $88.00 per share, Coherent trades at 19.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum 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-micro-cap company Kadant (+351% 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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