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.
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 is one value stock with strong fundamentals and two with little support.
Two Value Stocks to Sell:
Malibu Boats (MBUU)
Forward P/E Ratio: 10.4x
Founded in California in 1982, Malibu Boats (NASDAQ: MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Should You Sell MBUU?
- Number of boats sold has disappointed over the past two years, indicating weak demand for its offerings
- Sales over the last five years were less profitable as its earnings per share fell by 28.1% annually while its revenue was flat
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Malibu Boats is trading at $30.77 per share, or 10.4x forward P/E. If you’re considering MBUU for your portfolio, see our FREE research report to learn more.
Timken (TKR)
Forward P/E Ratio: 12.1x
Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE: TKR) is a provider of industrial parts used across various sectors.
Why Do We Pass on TKR?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Sales are projected to be flat over the next 12 months and imply weak demand
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 9.5% annually, worse than its revenue
At $68.43 per share, Timken trades at 12.1x forward P/E. Check out our free in-depth research report to learn more about why TKR doesn’t pass our bar.
One Value Stock to Watch:
HCA Healthcare (HCA)
Forward P/E Ratio: 13.7x
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Could HCA Be a Winner?
- Dominant market position is represented by its $71.59 billion in revenue, which creates significant barriers to entry in this highly regulated industry
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 20.7% exceeded its revenue gains over the last five years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
HCA Healthcare’s stock price of $371.61 implies a valuation ratio of 13.7x forward P/E. Is now a good time to buy? Find out 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 5 Growth Stocks for this month. 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
