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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. Keeping that in mind, here is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Churchill Downs (CHDN)
Consensus Price Target: $138.08 (52% implied return)
Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ: CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.
Why Do We Think CHDN Will Underperform?
- Lackluster 10.1% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Poor free cash flow margin of 10.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Churchill Downs’s stock price of $90.82 implies a valuation ratio of 14.2x forward P/E. If you’re considering CHDN for your portfolio, see our FREE research report to learn more.
American Outdoor Brands (AOUT)
Consensus Price Target: $12.50 (47.1% implied return)
Spun off from Smith and Wesson in 2020, American Outdoor Brands (NASDAQ: AOUT) is an outdoor and recreational products company that offers outdoor and shooting sports products but does not sell firearms themselves.
Why Should You Dump AOUT?
- Flat sales over the last five years suggest it must innovate and find new ways to grow
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.5% for the last two years
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $8.50 per share, American Outdoor Brands trades at 40.1x forward P/E. Read our free research report to see why you should think twice about including AOUT in your portfolio.
One Stock to Watch:
KBR (KBR)
Consensus Price Target: $54.78 (36.2% implied return)
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Why Does KBR Stand Out?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.9% exceeded its revenue gains over the last five years
- Returns on capital are growing as management capitalizes on its market opportunities
KBR is trading at $40.22 per share, or 10.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even 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 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 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
