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

General Motors (GM)

Forward P/E Ratio: 4.1x

Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.

Why Are We Cautious About GM?

1. Weak unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Sales are projected to tank by 3.5% over the next 12 months as demand evaporates
3. Gross margin of 12.4% reflects its high production costs

At $44.24 per share, General Motors trades at 4.1x forward price-to-earnings. To fully understand why you should be careful with GM, check out our full research report (it’s free).

THOR Industries (THO)

Forward P/E Ratio: 12.4x

Created through the acquisition and merger of various RV manufacturers, THOR Industries manufactures and sells a range of recreational vehicles, including motorhomes and travel trailers, catering to consumers seeking the freedom and comfort of the RV lifestyle.

Why Do We Pass on THO?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 17.4% annually over the last two years
2. Earnings per share have dipped by 3.5% annually over the past five years, which is concerning because stock prices follow EPS over the long term
3. Waning returns on capital imply its previous profit engines are losing steam

THOR Industries is trading at $73.56 per share, or 12.4x forward price-to-earnings. Read our free research report to see why you should think twice about including THO in your portfolio.

Brink's (BCO)

Forward P/E Ratio: 12x

Known for its iconic armored trucks that have been a fixture in American cities since 1859, Brink's (NYSE: BCO) provides secure transportation and management of cash and valuables for banks, retailers, and other businesses worldwide.

Why Are We Wary of BCO?

1. Demand will likely fall over the next 12 months as Wall Street expects flat revenue
2. Free cash flow margin dropped by 1.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Underwhelming 12.5% return on capital reflects management’s difficulties in finding profitable growth opportunities

Brink’s stock price of $84.39 implies a valuation ratio of 12x forward price-to-earnings. Check out our free in-depth research report to learn more about why BCO doesn’t pass our bar.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.