1 of Wall Street’s Favorite Stock with Solid Fundamentals and 2 to Approach with Caution

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 its enthusiasm might be excessive.

Two Stocks to Sell:

Purple (PRPL)

Consensus Price Target: $2 (161% implied return)

Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.

Why Do We Pass on PRPL?

1. Annual revenue declines of 7.7% over the last two years indicate problems with its market positioning
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $0.71 per share, Purple trades at 0.2x forward price-to-sales. To fully understand why you should be careful with PRPL, check out our full research report (it’s free).

EVgo (EVGO)

Consensus Price Target: $7.58 (139% implied return)

Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.

Why Are We Cautious About EVGO?

1. Poor expense management has led to operating losses
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

EVgo’s stock price of $2.60 implies a valuation ratio of 165.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than EVGO.

One Stock to Watch:

Option Care Health (OPCH)

Consensus Price Target: $31.56 (15.5% implied return)

With a nationwide network of 177 locations serving 43 states and a team of over 4,500 clinicians, Option Care Health (NASDAQ:OPCH) is the largest independent provider of home and alternate site infusion services, delivering medications and clinical support to patients across the United States.

Why Do We Like OPCH?

1. Impressive 16.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Share buybacks catapulted its annual earnings per share growth to 75.4%, which outperformed its revenue gains over the last five years
3. Free cash flow margin grew by 2.4 percentage points over the last five years, giving the company more chips to play with

Option Care Health is trading at $33.29 per share, or 25.5x forward price-to-earnings. Is now the time to initiate a position? 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 6 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.