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.

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 climbing an uphill battle and some other investments you should look into instead.

Bandwidth (BAND)

Forward P/S Ratio: 0.6x

Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ: BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.

Why Are We Cautious About BAND?

1. Revenue increased by 12.9% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Bad unit economics and steep infrastructure costs are reflected in its gross margin of 38.8%, one of the worst among software companies
3. Operating margin improvement of 2.2 percentage points over the last year demonstrates its ability to scale efficiently

Bandwidth’s stock price of $15.39 implies a valuation ratio of 0.6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BAND.

FedEx (FDX)

Forward P/E Ratio: 15.1x

Sporting one of the largest air cargo fleets in the world, FedEx (NYSE: FDX) is a global provider of parcel and cargo delivery services.

Why Do We Pass on FDX?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. Low free cash flow margin of 2.4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

FedEx is trading at $286.13 per share, or 15.1x forward P/E. If you’re considering FDX for your portfolio, see our FREE research report to learn more.

Jazz Pharmaceuticals (JAZZ)

Forward P/E Ratio: 7.4x

Originally founded in 2003 and now headquartered in Ireland following a 2012 tax inversion merger, Jazz Pharmaceuticals (NASDAQGS:JAZZ) develops and markets medicines for sleep disorders, epilepsy, and cancer, with a focus on treatments for patients with limited therapeutic options.

Why Are We Wary of JAZZ?

1. Muted 4.7% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Earnings per share fell by 8.7% annually over the last five years while its revenue grew, partly because it diluted shareholders
3. High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens

At $168.30 per share, Jazz Pharmaceuticals trades at 7.4x forward P/E. Check out our free in-depth research report to learn more about why JAZZ doesn’t pass our bar.

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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