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. That said, here is one value stock with strong fundamentals and two climbing an uphill battle.

Two Value Stocks to Sell:

Zeta (ZETA)

Forward P/S Ratio: 2.4x

Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE: ZETA) provides software and data analytics tools that help companies market their products to billions of customers.

Why Does ZETA Give Us Pause?

1. Customers have churned over the last year due to the commoditized nature of its software, as reflected in its 97% net revenue retention rate
2. Gross margin of 60.3% reflects its relatively high servicing costs
3. Historical operating losses show it had an inefficient cost structure while scaling

Zeta’s stock price of $11.70 implies a valuation ratio of 2.4x forward price-to-sales. Read our free research report to see why you should think twice about including ZETA in your portfolio.

Bath and Body Works (BBWI)

Forward P/E Ratio: 7.6x

Spun off from L Brands in 2020, Bath & Body Works (NYSE: BBWI) is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.

Why Does BBWI Worry Us?

1. Muted 6.2% annual revenue growth over the last five years shows its demand lagged behind its consumer retail peers
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
3. Estimated sales growth of 2.3% for the next 12 months implies demand will slow from its five-year trend

At $27.57 per share, Bath and Body Works trades at 7.6x forward price-to-earnings. If you’re considering BBWI for your portfolio, see our FREE research report to learn more.

One Value Stock to Watch:

Upwork (UPWK)

Forward EV/EBITDA Ratio: 9.7x

Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ: UPWK) is an online platform where businesses and independent professionals connect to get work done.

Why Does UPWK Stand Out?

1. Monetization efforts are paying off as its average revenue per customer has grown by 8.4% annually over the last two years
2. Additional sales over the last three years increased its profitability as the 168% annual growth in its earnings per share outpaced its revenue
3. Free cash flow margin increased by 21.1 percentage points over the last few years, giving the company more capital to invest or return to shareholders

Upwork is trading at $12.50 per share, or 9.7x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.