
1 of Wall Street’s Favorite Stock for Long-Term Investors and 2 to Be Wary Of
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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. That said, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where its enthusiasm might be excessive.
Two Stocks to Sell:
1-800-FLOWERS (FLWS)
Consensus Price Target: $10.88 (95.7% implied return)
Founded in 1976, 1-800-FLOWERS (NASDAQ:FLWS) is an online retailer of flowers, gifts, and gourmet foods, serving customers globally.
Why Is FLWS Risky?
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Products and services have few die-hard fans as sales have declined by 9.7% annually over the last two years
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Earnings per share fell by 29.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
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Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
1-800-FLOWERS’s stock price of $5.45 implies a valuation ratio of 17.5x forward price-to-earnings. If you’re considering FLWS for your portfolio, see our FREE research report to learn more .
CRA (CRAI)
Consensus Price Target: $211 (43.2% implied return)
Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ:CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.
Why Does CRAI Fall Short?
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Modest revenue base of $687.4 million gives it less fixed cost leverage and fewer distribution channels than larger companies
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Projected sales decline of 1.2% for the next 12 months points to a tough demand environment ahead
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Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.6 percentage points
CRA is trading at $164.50 per share, or 21.7x forward price-to-earnings. Read our free research report to see why you should think twice about including CRAI in your portfolio, it’s free .
One Stock to Buy:
Remitly (RELY)
Consensus Price Target: $26.33 (35.9% implied return)
With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ:RELY) is an online platform that enables consumers to safely and quickly send money globally.