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.
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 is one value stock with strong fundamentals and two with little support.
Two Value Stocks to Sell:
Tri Pointe Homes (TPH)
Forward P/E Ratio: 13.2x
Established in 2009 in California, Tri Pointe Homes (NYSE: TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Why Do We Think TPH Will Underperform?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 7.6% decline in its backlog
- Forecasted revenue decline of 18.5% for the upcoming 12 months implies demand will fall even further
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
At $37.35 per share, Tri Pointe Homes trades at 13.2x forward P/E. Dive into our free research report to see why there are better opportunities than TPH.
Walgreens (WBA)
Forward P/E Ratio: 8.2x
Primarily offering prescription medicine, health, and beauty products, Walgreens Boots Alliance (NASDAQ: WBA) is a pharmacy chain formed through the 2014 major merger of American company Walgreens and European company Alliance Boots.
Why Do We Steer Clear of WBA?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.2% for the last five years
- Gross margin of 17.7% is an output of its commoditized inventory
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
Walgreens’s stock price of $12.04 implies a valuation ratio of 8.2x forward P/E. To fully understand why you should be careful with WBA, check out our full research report (it’s free).
One Value Stock to Buy:
QuinStreet (QNST)
Forward P/E Ratio: 15x
Founded during the dot-com era in 1999 and specializing in high-intent consumer traffic, QuinStreet (NASDAQ: QNST) operates digital performance marketplaces that connect clients in financial and home services with consumers actively searching for their products.
Why Is QNST a Good Business?
- Annual revenue growth of 37.2% over the last two years was superb and indicates its market share increased during this cycle
- Forecasted revenue growth of 7.5% for the next 12 months indicates its momentum over the last two years is sustainable
- Earnings per share grew by 160% annually over the last two years and trumped its peers
QuinStreet is trading at $15.95 per share, or 15x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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 Kadant (+351% 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
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