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 is one value stock offering a compelling risk-reward profile and two climbing an uphill battle.
Two Value Stocks to Sell:
Macy's (M)
Forward P/E Ratio: 5.9x
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Why Do We Avoid M?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Sales are projected to tank by 4.3% over the next 12 months as its demand continues evaporating
- Poor expense management has led to an operating margin of 2.3% that is below the industry average
Macy's is trading at $11.33 per share, or 5.9x forward P/E. To fully understand why you should be careful with M, check out our full research report (it’s free).
Coty (COTY)
Forward P/E Ratio: 9x
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Think COTY Will Underperform?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Estimated sales decline of 2.7% for the next 12 months implies a challenging demand environment
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $4.94 per share, Coty trades at 9x forward P/E. If you’re considering COTY for your portfolio, see our FREE research report to learn more.
One Value Stock to Buy:
FirstSun Capital Bancorp (FSUN)
Forward P/B Ratio: 0.8x
Tracing its roots back to 1892 when it first opened its doors in Kansas, FirstSun Capital Bancorp (NASDAQ: FSUN) operates Sunflower Bank, providing commercial and consumer banking services to businesses and individuals across the Southwest region.
Why Will FSUN Outperform?
- Annual net interest income growth of 20.5% over the last four years was superb and indicates its market share increased during this cycle
- Differentiated product suite results in a strong performance of its loan book results in a High-yielding loan book and low cost of funds are reflected in its top-tier net interest margin of 4.2%
- Annual tangible book value per share growth of 12.1% over the last five years was superb and indicates its capital strength increased during this cycle
FirstSun Capital Bancorp’s stock price of $33.30 implies a valuation ratio of 0.8x forward P/B. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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.
