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.

Scholastic (SCHL)

Forward P/E Ratio: 10.5x

Creator of the legendary Scholastic Book Fair, Scholastic (NASDAQ: SCHL) is an international company specializing in children's publishing, education, and media services.

Why Do We Think Twice About SCHL?

1. Sales stagnated over the last five years and signal the need for new growth strategies
2. Poor expense management has led to an operating margin of 3% that is below the industry average
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Scholastic is trading at $17.94 per share, or 10.5x forward P/E. Read our free research report to see why you should think twice about including SCHL in your portfolio.

MillerKnoll (MLKN)

Forward P/E Ratio: 7.2x

Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ: MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.

Why Should You Dump MLKN?

1. Annual sales declines of 7.8% for the past two years show its products and services struggled to connect with the market during this cycle
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 9.6% annually
3. Free cash flow margin dropped by 4.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up

MillerKnoll’s stock price of $17.69 implies a valuation ratio of 7.2x forward P/E. Dive into our free research report to see why there are better opportunities than MLKN.

Fortrea (FTRE)

Forward P/E Ratio: 8.7x

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Why Are We Out on FTRE?

1. Sales tumbled by 5.6% annually over the last two years, showing market trends are working against its favor during this cycle
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $4.52 per share, Fortrea trades at 8.7x forward P/E. Check out our free in-depth research report to learn more about why FTRE doesn’t pass our bar.

Stocks We Like 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 5 Strong Momentum Stocks for this week. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.