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. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
Timken (TKR)
Forward P/E Ratio: 12.6x
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 Are We Out 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
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Timken is trading at $75.07 per share, or 12.6x forward P/E. To fully understand why you should be careful with TKR, check out our full research report (it’s free).
AT&T (T)
Forward P/E Ratio: 13.5x
Founded by Alexander Graham Bell, AT&T (NYSE: T) is a multinational telecomm conglomerate providing a range of communications and internet services.
Why Do We Pass on T?
- Products and services have few die-hard fans as sales have declined by 6.7% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 9% annually, worse than its revenue declines
- Free cash flow margin is forecasted to shrink by 2.1 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
At $29.48 per share, AT&T trades at 13.5x forward P/E. Dive into our free research report to see why there are better opportunities than T.
BGC (BGC)
Forward P/E Ratio: 7.7x
Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ: BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.
Why Are We Hesitant About BGC?
- 3.8% annual revenue growth over the last four years was slower than its financials peers
BGC’s stock price of $9.86 implies a valuation ratio of 7.7x forward P/E. Read our free research report to see why you should think twice about including BGC in your portfolio.
High-Quality Stocks for All Market Conditions
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Take advantage of the rebound by checking out our Top 5 Strong Momentum 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).
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