1 of Wall Street’s Favorite Stocks Worth Your Attention and 2 That Underwhelm

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. Keeping that in mind, here is one stock where Wall Street's excitement appears well-founded and two where its enthusiasm might be excessive.

Two Stocks to Sell:

Alight (ALIT)

Consensus Price Target: $17 (83.8% implied return)

Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE:ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.

Why Do We Avoid ALIT?

1. Sales tumbled by 4.1% annually over the last five years, showing market trends are working against it during this cycle

2. Earnings per share have dipped by 7.3% annually over the past four years, which is concerning because stock prices follow EPS over the long term

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Alight's stock price of $9.25 implies a valuation ratio of 2x forward P/E. To fully understand why you should be careful with ALIT, check out our full research report (it's free) .

Bank of Hawaii (BOH)

Consensus Price Target: $81.17 (21% implied return)

Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE:BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.

Why Is BOH Not Exciting?

1. Annual net interest income growth of 3.8% over the last five years was below our standards for the banking sector

2. Weak unit economics are reflected in its net interest margin of 2.5%, one of the worst among bank companies

3. Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat

At $67.07 per share, Bank of Hawaii trades at 1.7x forward P/B. Check out our free in-depth research report to learn more about why BOH doesn't pass our bar .

One Stock to Buy:

Expand Energy (EXE)

Consensus Price Target: $123.22 (38.7% implied return)

Rebranded from Chesapeake Energy in 2024 after emerging from bankruptcy, Expand Energy (NASDAQ:EXE) produces natural gas, oil, and natural gas liquids from underground shale formations in Louisiana, Pennsylvania, Ohio, and West Virginia.