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. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

Denny's (DENN)

Forward P/E Ratio: 7.7x

Open around the clock, Denny’s (NASDAQ: DENN) is a chain of diner restaurants serving breakfast and traditional American fare.

Why Are We Out on DENN?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 9 percentage points
3. 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $4 per share, Denny's trades at 7.7x forward P/E. To fully understand why you should be careful with DENN, check out our full research report (it’s free).

Accel Entertainment (ACEL)

Forward P/E Ratio: 12.4x

Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.

Why Are We Cautious About ACEL?

1. Demand for its offerings was relatively low as its number of video gaming terminals sold has underwhelmed
2. Estimated sales growth of 6.5% for the next 12 months implies demand will slow from its two-year trend
3. Low free cash flow margin of 4.4% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Accel Entertainment is trading at $11.46 per share, or 12.4x forward P/E. Read our free research report to see why you should think twice about including ACEL in your portfolio.

Walgreens (WBA)

Forward P/E Ratio: 7.4x

Primarily offering prescription medicine, health, and beauty products, Walgreens Boots Alliance (NASDAQ: WBA) is a pharmacy chain formed through the 2014 major merger of American company Walgreens and European company Alliance Boots.

Why Does WBA Worry Us?

1. Sizable revenue base leads to growth challenges as its 2.9% annual revenue increases over the last six years fell short of other consumer retail companies
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 18%
3. 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Walgreens’s stock price of $11.26 implies a valuation ratio of 7.4x forward P/E. If you’re considering WBA for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

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 6 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.