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. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
ADT (ADT)
Forward P/E Ratio: 9.8x
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE: ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Is ADT Not Exciting?
- Demand for its offerings was relatively low as its number of customers has underwhelmed
- Estimated sales growth of 3.6% for the next 12 months is soft and implies weaker demand
- ROIC of 5.7% reflects management’s challenges in identifying attractive investment opportunities
ADT is trading at $8.57 per share, or 9.8x forward P/E. Check out our free in-depth research report to learn more about why ADT doesn’t pass our bar.
Ball (BALL)
Forward P/E Ratio: 13.9x
Started with a $200 loan in 1880, Ball (NYSE: BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.
Why Should You Dump BALL?
- 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
- Gross margin of 21.6% reflects its high production costs
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $52.55 per share, Ball trades at 13.9x forward P/E. Read our free research report to see why you should think twice about including BALL in your portfolio.
Taylor Morrison Home (TMHC)
Forward P/E Ratio: 8.4x
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.
Why Are We Out on TMHC?
- Backlog has dropped by 12.7% on average over the past two years, suggesting it’s losing orders as competition picks up
- Estimated sales decline of 8.2% for the next 12 months implies an even more challenging demand environment
- Earnings per share have dipped by 2.1% annually over the past two years, which is concerning because stock prices follow EPS over the long term
Taylor Morrison Home’s stock price of $64.55 implies a valuation ratio of 8.4x forward P/E. If you’re considering TMHC for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
