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.
Separating the winners from the value traps is a tough challenge, and that’s where StockStory comes in. Our job is to find you high-quality companies that will stand the test of time. Keeping that in mind, here are three value stocks with little support and some other investments you should consider instead.
Calavo (CVGW)
Forward P/E Ratio: 14.5x
A trailblazer in the avocado industry, Calavo Growers (NASDAQ: CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.
Why Do We Avoid CVGW?
- Products have few die-hard fans as sales have declined by 15.8% annually over the last three years
- Forecasted revenue decline of 1.8% for the upcoming 12 months implies demand will fall even further
- Gross margin of 10.5% is below its competitors, leaving less money to invest in areas like marketing and production facilities
At $27.71 per share, Calavo trades at 14.5x forward P/E. To fully understand why you should be careful with CVGW, check out our full research report (it’s free).
Funko (FNKO)
Forward P/E Ratio: 13.3x
Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ: FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.
Why Do We Think FNKO Will Underperform?
- Sales tumbled by 9.7% annually over the last two years, showing consumer trends are working against its favor
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Funko is trading at $2.72 per share, or 13.3x forward P/E. Dive into our free research report to see why there are better opportunities than FNKO.
MRC Global (MRC)
Forward P/E Ratio: 11.3x
Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE: MRC) offers pipes, valves, and fitting products for various industries.
Why Do We Steer Clear of MRC?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Earnings per share decreased by more than its revenue over the last two years, partly because it diluted shareholders
- 5.1 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
MRC Global’s stock price of $13.93 implies a valuation ratio of 11.3x forward P/E. Read our free research report to see why you should think twice about including MRC in your portfolio.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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 Comfort Systems (+782% 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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