Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor. The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.
Identifying genuine bargains from value traps is something many investors struggle with, which is why we started StockStory - to help you find the best companies. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
Terex (TEX)
Forward P/E Ratio: 11x
With humble beginnings as a dump truck company, Terex (NYSE: TEX) today manufactures lifting and material handling equipment designed to move and hoist heavy goods and materials.
Why Are We Wary of TEX?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Earnings per share have dipped by 16.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Free cash flow margin dropped by 6.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $53.94 per share, Terex trades at 11x forward P/E. Check out our free in-depth research report to learn more about why TEX doesn’t pass our bar.
Luxfer (LXFR)
Forward P/E Ratio: 11.7x
With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE: LXFR) offers specialized materials, components, and gas containment devices to various industries.
Why Should You Sell LXFR?
- Sales trends were unexciting over the last one years as its 1.6% annual growth was below the typical industrials company
- 8.7 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
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Luxfer is trading at $12.44 per share, or 11.7x forward P/E. Dive into our free research report to see why there are better opportunities than LXFR.
Dentsply Sirona (XRAY)
Forward P/E Ratio: 8.8x
With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ: XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.
Why Are We Out on XRAY?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Dentsply Sirona’s stock price of $16.67 implies a valuation ratio of 8.8x forward P/E. If you’re considering XRAY for your portfolio, see our FREE research report to learn more.
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 5 Strong Momentum Stocks for this week. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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