Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices. But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues.
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. That said, here is one value stock with strong fundamentals and two climbing an uphill battle.
Two Value Stocks to Sell:
Align Technology (ALGN)
Forward P/E Ratio: 12.5x
Pioneering an alternative to traditional metal braces with nearly invisible plastic aligners, Align Technology (NASDAQ: ALGN) designs and manufactures Invisalign clear aligners, iTero intraoral scanners, and dental CAD/CAM software for orthodontic and restorative treatments.
Why Is ALGN Not Exciting?
- Disappointing clear aligner shipments over the past two years imply it may need to invest in improvements to get back on track
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7.5 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $132.82 per share, Align Technology trades at 12.5x forward P/E. Dive into our free research report to see why there are better opportunities than ALGN.
Henry Schein (HSIC)
Forward P/E Ratio: 12.8x
With a vast inventory of over 300,000 products stocked in distribution centers spanning more than 5.3 million square feet worldwide, Henry Schein (NASDAQ: HSIC) is a global distributor of healthcare products and services primarily to dental practices, medical offices, and other healthcare facilities.
Why Does HSIC Worry Us?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.6 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Henry Schein’s stock price of $65.19 implies a valuation ratio of 12.8x forward P/E. If you’re considering HSIC for your portfolio, see our FREE research report to learn more.
One Value Stock to Buy:
Cal-Maine (CALM)
Forward P/E Ratio: 13.2x
Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ: CALM) produces, packages, and distributes eggs.
Why Do We Love CALM?
- Annual revenue growth of 27.7% over the last three years was superb and indicates its market share is rising
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 66.4% outpaced its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
Cal-Maine is trading at $92.68 per share, or 13.2x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 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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