2 of Wall Street’s Favorite Stocks to Research Further and 1 to Approach with Caution

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 are two stocks likely to meet or exceed Wall Street’s lofty expectations and one where analysts may be overlooking some important risks.

Consensus Price Target: $27.50 (70.9% implied return)

With 19 different brands across the globe, Columbus McKinnon (NASDAQ:CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.

Why Do We Pass on CMCO?

Muted 1.4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers

Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.2% annually while its revenue grew

10.8 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

Columbus McKinnon’s stock price of $16.09 implies a valuation ratio of 5.9x forward P/E. If you’re considering CMCO for your portfolio, see our FREE research report to learn more.

Consensus Price Target: $31 (62.6% implied return)

Sporting a global footprint of facilities, Photronics (NASDAQ:PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.

Why Are We Positive On PLAB?

Operating margin improvement of 14.3 percentage points over the last five years demonstrates its ability to scale efficiently

Share repurchases over the last five years enabled its annual earnings per share growth of 31.7% to outpace its revenue gains

Industry-leading 25.4% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets

Photronics is trading at $19.06 per share, or 9.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Consensus Price Target: $146.97 (27% implied return)

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