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.

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. Keeping that in mind, here are two value stocks with strong fundamentals and one climbing an uphill battle.

One Value Stock to Sell:

GMS (GMS)

Forward P/E Ratio: 9.9x

Founded in 1971, GMS (NYSE: GMS) distributes specialty building materials including wallboard, ceilings, and insulation products, to the construction industry.

Why Are We Wary of GMS?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Projected sales decline of 3.7% for the next 12 months points to a tough demand environment ahead
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

GMS is trading at $77.13 per share, or 9.9x forward P/E. Dive into our free research report to see why there are better opportunities than GMS.

Two Value Stocks to Watch:

Abercrombie and Fitch (ANF)

Forward P/E Ratio: 6.9x

Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.

Why Are We Fans of ANF?

1. Same-store sales growth averaged 14.6% over the past two years, showing it’s bringing new and repeat shoppers into its stores
2. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Strong free cash flow margin of 11.1% enables it to reinvest or return capital consistently

At $78 per share, Abercrombie and Fitch trades at 6.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Integral Ad Science (IAS)

Forward P/S Ratio: 2.2x

Founded in 2009, Integral Ad Science (NASDAQ: IAS) provides digital advertising verification and optimization solutions, ensuring that ads are viewable by real people in brand-safe environments across various platforms and devices.

Why Are We Positive On IAS?

1. Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
2. Operating margin expanded by 11.3 percentage points over the last year as it scaled and became more efficient
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Integral Ad Science’s stock price of $7.82 implies a valuation ratio of 2.2x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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.