The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.

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. That said, here is one value stock trading at a big discount to its intrinsic value and two with little support.

Two Value Stocks to Sell:

Domo (DOMO)

Forward P/S Ratio: 2.1x

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 Do We Pass on DOMO?

1. Products, pricing, or go-to-market strategy need some adjustments as its billings have averaged 2.4% declines over the last year
2. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

At $16.27 per share, Domo trades at 2.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DOMO.

America's Car-Mart (CRMT)

Forward P/E Ratio: 11.7x

With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ: CRMT) sells used cars to budget-conscious consumers.

Why Is CRMT Risky?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Earnings per share have contracted by 29.1% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

America's Car-Mart is trading at $45.57 per share, or 11.7x forward P/E. To fully understand why you should be careful with CRMT, check out our full research report (it’s free).

One Value Stock to Watch:

Lantheus (LNTH)

Forward P/E Ratio: 10x

Pioneering the "Find, Fight and Follow" approach to disease management, Lantheus Holdings (NASDAQGM:LNTH) develops and commercializes radiopharmaceuticals and other imaging agents that help healthcare professionals detect, diagnose, and treat diseases.

Why Are We Positive On LNTH?

1. Annual revenue growth of 34.3% over the last five years was superb and indicates its market share increased during this cycle
2. Free cash flow margin increased by 29.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
3. Improving returns on capital reflect management’s ability to monetize investments

Lantheus’s stock price of $71.30 implies a valuation ratio of 10x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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