Price targets are standard practice on Wall Street. But sometimes, they can act as an artificial ceiling.
For example, say Truist sets a price target on an up-and-coming growth stock that’s 25% higher than its current share price. For a growth stock, a 25% return isn’t much. But then again, the stock could be a total flop, which is the natural boom-or-bust tradeoff growth investors must endure in trading off increased risk for massive upside. So, a price target on a growth stock seems almost like an unnecessary cap on a stock that has the potential to go through the roof.
Value stocks are different. The entire premise of value investing is buying stocks that are trading below their intrinsic value – or at least below their historic norm or where their earnings and sales growth suggest they should be trading. When they become “fully valued,” they often begin to stall – which makes price targets come in handy.
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Let’s look at a few stocks I recently “retired” (sold) from my Cabot Value Investor newsletter because they reached or exceeded their price target. By examining how those stocks have behaved since we booked profits on them, we can determine whether selling/retiring them was the right choice.
3 Price-Target Sells that Were ‘Right’
First up is FedEx (FDX).
I recommended the package and shipping giant in Cabot Value Investor on September 4, 2025, when it was trading at 225 a share. I set a price target of 300. It took only four months for FDX to reach – or, in fact, exceed – that target, as I retired it from the portfolio in January 8 of this year when it was trading at 308, for a quick profit of 37%, not including the roughly 2% dividend yield. Today, more than six months later, FDX trades at 312 a share – slightly higher, yes, but not worth keeping in the portfolio for the extra 1.3% return. Subsequent additions to the Cabot Value Investor portfolio have performed far better in the last six months.
Aegon (AEG) was another example of the price target doing its job. I recommended the Dutch life insurance and asset management company in Cabot Value Investor on March 6, 2025, when it was trading at 6.25 a share; I set a price target of 8.00. It took about six-and-a-half months for the stock to get there, as we closed out AEG on September 25 for a 28% profit. The stock has risen to the 8.8-to-8.9 range in the (nearly) 10 months since we sold it. That’s a solid additional gain, and we would have done fine to hang on to it, but we’re not losing sleep over a “missed” 10% gain in 10 months. AEG’s biggest growth period occurred before we sold it.
The last, and perhaps best, example of a stock I sold at the right time after it reached my price target is Carnival Corp. (CCL). The big-name cruise company stock was reporting record sales and earnings when I recommended it on May 1, 2025, and yet shares were still trading well below pre-Covid prices, as cruise-line stocks had not yet regained favor on Wall Street since the pandemic upended their business, even though the companies themselves were thriving again.
I recommended CCL at 18 a share, and set a price target of 28. It took barely more than two months for the stock to reach that target, for an almost overnight profit (at least in value investing parlance) of 62%. I retired it from the portfolio on July 10, after it had topped 29 a share. In the year since my subscribers booked profits on it, CCL shares have fallen to 26.5 – about a 10% drop-off. Our decision to sell the stock just after it had exceeded our price target was the right one, even though it was tempting at the time to hang on to it due to its seemingly unrelenting momentum (in fairness, the stock did reach as high as 34 a share this past February, but it’s been mostly downhill since).
Those three stocks are three of the most recent recommendations in the Cabot Value Investor portfolio to reach the price targets I set on them. The fact that we’re not kicking ourselves for selling too early on any of them speaks to the power of the price target – imprecise though it may be – when it comes to value investing.
But What About Growthier Names?
That said, my mantra at Cabot Value Investor is “growth at value prices.” So, I don’t want to cap potential gains on a stock that I think has more upside. That was the case with BYD (BYDDY), the Chinese electric vehicle giant that we booked a 77% profit on in May 2025 after just six months – and after we had raised our price target it on it because we (correctly) thought it had more room to tun. (And thank goodness we sold when we did – May 2025 was certainly the top for BYD; the stock subsequently lost more than half its value over the ensuing 13 months.)
Similarly, I raised our price target on United Airlines (UAL) after the stock came roaring out of the gates following my May 2024 recommendation, due in part to improving earnings results and guidance. By raising our price target, we allowed the stock to stretch its legs a bit more, resulting in a 79% return in 10 months.
Bottom line: when it comes to traditional value stocks, it makes sense to book profits on a position when it reaches your price target. But there are exceptions to that rule, especially if the stock has more of a growth tilt; sometimes moving the goal posts can improve your return. It’s an inexact science, and no one will always get it right; your decision may depend on your risk appetite.
Either way, when a stock reaches your price target, it’s a good problem to have!
And if you want to know what 10 stocks I’m currently recommending (and have set price targets on) in Cabot Value Investor, you can become a subscriber by clicking here.
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