I'm new to the forums and also a new player to X-wing. I was teaching my wife, kids and myself how to play tonight and was wondering if the only penalties for pilot stress was the inability to perform an action in the end of the activation phase and the inability to perform a red move in the following action phase. To further clarify, what I mean is stress doesn't prevent a pilot from attacking, correct?

Correct. Pilots may attack as normal with a stress token and may still spend any tokens they happen to have (eg Target Lock or Focus) during that attack. Getting a Focus token while stressed takes some effort, but can be done.

Stress doesn't affect attacks at all.

It does stop a ship from performing any actions (including free actions) and, as you mention, you can't declare a red maneuver while stressed. But that's it.

Thanks a lot!

Something here is not entirely true.

You CAN set a red maneuver on your dial if you want while you have Stress but as originally noted you can not PERFORM that maneuver while stressed. In that situation you hand your ship's dial to your opponent who then can set the dial to any maneuver you legally (non-red) can perform even if it is not close to what you would like.