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.
This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. Keeping that in mind, here are three value stocks with little support and some other investments you should consider instead.
Domo (DOMO)
Forward P/S Ratio: 1.8x
Founded by Josh James after selling his former business Omniture to Adobe, Domo (NASDAQ: DOMO) provides business intelligence software that allows managers to access and visualize critical business metrics in real-time, using their smartphones.
Why Should You Sell DOMO?
- Customers had second thoughts about committing to its platform over the last year as its billings averaged 2.4% declines
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Domo is trading at $14.30 per share, or 1.8x forward price-to-sales. If you’re considering DOMO for your portfolio, see our FREE research report to learn more.
Etsy (ETSY)
Forward EV/EBITDA Ratio: 9x
Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NASDAQ: ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.
Why Are We Hesitant About ETSY?
- Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its active buyers were flat over the last two years
- Sales are projected to tank by 1.8% over the next 12 months as demand evaporates
- Earnings growth over the last three years fell short of the peer group average as its EPS only increased by 2.6% annually
Etsy’s stock price of $63.64 implies a valuation ratio of 9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than ETSY.
Bausch + Lomb (BLCO)
Forward P/E Ratio: 15.1x
With a nearly 170-year history dedicated to vision care and eye health innovation, Bausch + Lomb (NYSE: BLCO) develops and manufactures a comprehensive range of eye health products including contact lenses, pharmaceuticals, surgical devices, and consumer eye care solutions.
Why Does BLCO Fall Short?
- Annual revenue growth of 5.3% over the last five years was below our standards for the healthcare sector
- Free cash flow margin shrank by 20.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $11.98 per share, Bausch + Lomb trades at 15.1x forward P/E. Read our free research report to see why you should think twice about including BLCO in your portfolio.
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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
