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. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

Cushman & Wakefield (CWK)

Forward P/E Ratio: 9x

With expertise in the commercial real estate sector, Cushman & Wakefield (NYSE: CWK) is a global Chicago-based real estate firm offering a comprehensive range of services to clients.

Why Do We Think CWK Will Underperform?

1. Products and services have few die-hard fans as sales have declined by 3.3% annually over the last two years
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 11.1% annually
3. Underwhelming 5.9% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $10.47 per share, Cushman & Wakefield trades at 9x forward price-to-earnings. If you’re considering CWK for your portfolio, see our FREE research report to learn more.

NV5 Global (NVEE)

Forward P/E Ratio: 15.6x

Operating from over 100 locations across the U.S. and internationally, NV5 Global (NASDAQ: NVEE) provides engineering, environmental, geospatial, and technical consulting services to public and private sector clients for infrastructure and building projects.

Why Do We Think Twice About NVEE?

1. Day-to-day expenses have swelled relative to revenue over the last four years as its adjusted operating margin fell by 5.1 percentage points
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 4.9% annually while its revenue grew
3. Capital intensity has ramped up over the last four years as its free cash flow margin decreased by 8.3 percentage points

NV5 Global’s stock price of $19 implies a valuation ratio of 15.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than NVEE.

ePlus (PLUS)

Forward P/E Ratio: 12x

Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ: PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.

Why Are We Hesitant About PLUS?

1. Annual revenue growth of 2.4% over the last two years was below our standards for the business services sector
2. Earnings per share have dipped by 2.1% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Low free cash flow margin of 4.4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

ePlus is trading at $63.11 per share, or 12x forward price-to-earnings. Read our free research report to see why you should think twice about including PLUS in your portfolio.

Stocks We Like More

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Get started by checking 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.