The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.

This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

Quanex (NX)

Forward P/E Ratio: 9.1x

Starting in the seamless tube industry, Quanex (NYSE: NX) manufactures building products like window, door, kitchen, and bath cabinet components.

Why Does NX Worry Us?

1. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 18.2 percentage points
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 8.5% annually
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Quanex is trading at $19.38 per share, or 9.1x forward P/E. Check out our free in-depth research report to learn more about why NX doesn’t pass our bar.

ICF International (ICFI)

Forward P/E Ratio: 13.8x

Operating at the intersection of policy, technology, and implementation for over five decades, ICF International (NASDAQ: ICFI) provides professional consulting services and technology solutions to government agencies and commercial clients across energy, health, environment, and security sectors.

Why Should You Dump ICFI?

1. Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 2.9% declines over the past two years
2. Projected sales decline of 3% for the next 12 months points to an even tougher demand environment ahead
3. Earnings per share lagged its peers over the last two years as they only grew by 6% annually

ICF International’s stock price of $89.72 implies a valuation ratio of 13.8x forward P/E. Dive into our free research report to see why there are better opportunities than ICFI.

Fastly (FSLY)

Forward P/S Ratio: 2.1x

Taking its name from the core advantage it delivers to customers, Fastly (NYSE: FSLY) operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.

Why Do We Pass on FSLY?

1. Below-average net revenue retention rate of 103% suggests it has some trouble expanding within existing accounts
2. Bad unit economics and steep infrastructure costs are reflected in its gross margin of 55%, one of the worst among software companies
3. Suboptimal cost structure is highlighted by its history of operating margin losses

At $8.84 per share, Fastly trades at 2.1x forward price-to-sales. Read our free research report to see why you should think twice about including FSLY in your portfolio.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.