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1 of Wall Street’s Favorite Stock on Our Buy List and 2 to Think Twice About

Barchart · 06/11 04:10

NDLS Cover Image

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. 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:

Noodles (NDLS)

Consensus Price Target: $2.83 (226% implied return)

Offering pasta, mac and cheese, pad thai, and more, Noodles & Company (NASDAQ:NDLS) is a casual restaurant chain that serves all manner of noodles from around the world.

Why Do We Steer Clear of NDLS?

  1. Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
  2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
  3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Noodles’s stock price of $0.87 implies a valuation ratio of 1.3x forward EV-to-EBITDA. If you’re considering NDLS for your portfolio, see our FREE research report to learn more.

TransUnion (TRU)

Consensus Price Target: $105.67 (18.9% implied return)

One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE:TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.

Why Are We Hesitant About TRU?

  1. 10.1 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
  2. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up

TransUnion is trading at $88.90 per share, or 21.1x forward P/E. Read our free research report to see why you should think twice about including TRU in your portfolio.

One Stock to Buy:

Coastal Financial (CCB)

Consensus Price Target: $108.50 (18.3% implied return)

With a unique dual-segment approach that bridges traditional community banking with modern financial technology, Coastal Financial (NASDAQ:CCB) operates as a bank holding company that provides traditional banking services and Banking-as-a-Service (BaaS) solutions.

Why Do We Love CCB?

  1. Annual net interest income growth of 46% over the last four years was superb and indicates its market share increased during this cycle
  2. Projected 7.2 percentage point efficiency ratio increase over the next year signals its day-to-day expenses will rise
  3. Earnings per share have massively outperformed its peers over the last five years, increasing by 25.6% annually

At $91.75 per share, Coastal Financial trades at 2.8x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.

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