3 of Wall Street’s Favorite Stocks We Find Risky

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 may be overlooking some important risks and some alternatives with better fundamentals.

Cars.com (CARS)

Consensus Price Target: $12.43 (52.2% implied return)

Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.

Why Are We Hesitant About CARS?

1. May need to improve its platform and marketing strategy as its 1% average growth in dealer customers underwhelmed
2. Estimated sales growth of 1% for the next 12 months implies demand will slow from its three-year trend
3. Earnings per share were flat over the last three years while its revenue grew, showing its incremental sales were less profitable

At $8.17 per share, Cars.com trades at 4.2x forward EV/EBITDA. If you’re considering CARS for your portfolio, see our FREE research report to learn more.

Travel + Leisure (TNL)

Consensus Price Target: $87.17 (23.9% implied return)

Formerly known as Wyndham Destinations, Travel + Leisure (NYSE:TNL) is a global vacation company that provides travelers with vacation ownership, exchange, and travel services.

Why Do We Think TNL Will Underperform?

1. Performance surrounding its tours conducted has lagged its peers
2. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
3. High net-debt-to-EBITDA ratio of 8× increases the risk of forced asset sales or dilutive financing if operational performance weakens

Travel + Leisure’s stock price of $70.35 implies a valuation ratio of 9.5x forward P/E. Dive into our free research report to see why there are better opportunities than TNL.

MillerKnoll (MLKN)

Consensus Price Target: $32 (78.8% implied return)

Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ:MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.

Why Do We Steer Clear of MLKN?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 8.4% annually
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.4% for the last five years

MillerKnoll is trading at $17.90 per share, or 8.5x forward P/E. Read our free research report to see why you should think twice about including MLKN in your portfolio.

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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.