2 of Wall Street’s Favorite Stocks with Competitive Advantages and 1 to Be Wary Of

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. That said, here are two stocks where Wall Street’s positive outlook is supported by strong fundamentals and one where analysts may be overlooking some important risks.

One Stock to Sell:

Danaher (DHR)

Consensus Price Target: $283.31 (34.5% implied return)

Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE:DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.

Why Are We Cautious About DHR?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.2%
3. Adjusted operating profits fell over the last two years as its sales dropped and it struggled to adjust its fixed costs

Danaher’s stock price of $190.66 implies a valuation ratio of 23.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than DHR.

Two Stocks to Watch:

Robinhood (HOOD)

Consensus Price Target: $50.65 (42.6% implied return)

With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

Why Are We Backing HOOD?

1. 43.9% annual increases in its average revenue per user over the last two years show its platform is resonating with power users
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 30.5% over the last three years outstripped its revenue performance
3. Free cash flow margin increased by 1,059.8 percentage points over the last few years, giving the company more capital to invest or return to shareholders

Robinhood is trading at $41.18 per share, or 21.6x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Zoetis (ZTS)

Consensus Price Target: $208.60 (35.1% implied return)

Originally spun off from Pfizer in 2013 as the world's largest pure-play animal health company, Zoetis (NYSE:ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.

Why Do We Like ZTS?

1. Constant currency growth averaged 9% over the past two years, showing it can expand globally regardless of the macroeconomic environment
2. Strong free cash flow margin of 21.5% enables it to reinvest or return capital consistently
3. ROIC punches in at 28.7%, illustrating management’s expertise in identifying profitable investments

At $147.28 per share, Zoetis trades at 23.6x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

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 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.