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.

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 are three value stocks with little support and some other investments you should consider instead.

General Mills (GIS)

Forward P/E Ratio: 12.9x

Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE: GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.

Why Do We Think Twice About GIS?

1. Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Projected sales decline of 3.3% for the next 12 months points to an even tougher demand environment ahead
3. Free cash flow margin dropped by 3.1 percentage points over the last year, implying the company became more capital intensive as competition picked up

General Mills is trading at $47.37 per share, or 12.9x forward P/E. To fully understand why you should be careful with GIS, check out our full research report (it’s free for active Edge members).

LKQ (LKQ)

Forward P/E Ratio: 9.4x

A global distributor of vehicle parts and accessories, LKQ (NASDAQ: LKQ) offers its customers a comprehensive selection of high-quality, affordably priced automobile products.

Why Do We Pass on LKQ?

1. 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
2. Free cash flow margin is not anticipated to grow over the next year
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

LKQ’s stock price of $29.68 implies a valuation ratio of 9.4x forward P/E. Dive into our free research report to see why there are better opportunities than LKQ.

DXC (DXC)

Forward P/E Ratio: 4.3x

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

Why Are We Out on DXC?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Flat earnings per share over the last five years underperformed the sector average
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam

At $13.12 per share, DXC trades at 4.3x forward P/E. Read our free research report to see why you should think twice about including DXC in your portfolio.

Stocks We Like More

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 Strong Momentum Stocks for this week. 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 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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