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. That said, here are three value stocks with poor fundamentals and some alternatives you should consider instead.

Ford (F)

Forward P/E Ratio: 7.6x

Established to make automobiles accessible to a broader segment of the population, Ford (NYSE: F) designs, manufactures, and sells a variety of automobiles, trucks, and electric vehicles.

Why Should You Sell F?

1. Flat vehicles sold over the past two years imply it may need to invest in improvements to get back on track
2. 13.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. 8× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Ford is trading at $10.37 per share, or 7.6x forward P/E. If you’re considering F for your portfolio, see our FREE research report to learn more.

Regeneron (REGN)

Forward P/E Ratio: 14.7x

Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ: REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.

Why Does REGN Fall Short?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.7% for the last two years
2. Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 12.3 percentage points
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Regeneron’s stock price of $591 implies a valuation ratio of 14.7x forward P/E. To fully understand why you should be careful with REGN, check out our full research report (it’s free).

SAIC (SAIC)

Forward P/E Ratio: 12.9x

With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.

Why Do We Think SAIC Will Underperform?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.5% annually over the last two years
2. Estimated sales growth of 2.7% for the next 12 months is soft and implies weaker demand
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $123.14 per share, SAIC trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including SAIC in your portfolio.

Stocks We Like 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 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

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.