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. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
Herbalife (HLF)
Forward P/E Ratio: 3.3x
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE: HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Why Is HLF Not Exciting?
- Falling unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Earnings per share have dipped by 22% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Herbalife’s stock price of $6.79 implies a valuation ratio of 3.3x forward P/E. Dive into our free research report to see why there are better opportunities than HLF.
Amneal (AMRX)
Forward P/E Ratio: 10.3x
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Are We Hesitant About AMRX?
- 12.1 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
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Amneal is trading at $7.15 per share, or 10.3x forward P/E. Check out our free in-depth research report to learn more about why AMRX doesn’t pass our bar.
Dun & Bradstreet (DNB)
Forward P/E Ratio: 8.4x
Known for its proprietary D-U-N-S Number that serves as a unique identifier for businesses worldwide, Dun & Bradstreet (NYSE: DNB) provides business decisioning data and analytics that help companies evaluate credit risks, verify suppliers, enhance sales productivity, and gain market visibility.
Why Are We Wary of DNB?
- Annual revenue growth of 3.7% over the last two years was below our standards for the business services sector
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 5 percentage points
- ROIC of 0.3% reflects management’s challenges in identifying attractive investment opportunities
At $9.00 per share, Dun & Bradstreet trades at 8.4x forward P/E. Read our free research report to see why you should think twice about including DNB in your portfolio.
Stocks That Overcame Trump’s 2018 Tariffs
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 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.
