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.

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. Keeping that in mind, here are three value stocks with poor fundamentals and some alternatives you should consider instead.

Advance Auto Parts (AAP)

Forward P/E Ratio: 14.9x

Founded in Virginia in 1932, Advance Auto Parts (NYSE: AAP) is an auto parts and accessories retailer that sells everything from carburetors to motor oil to car floor mats.

Why Are We Out on AAP?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Free cash flow margin dropped by 6.7 percentage points over the last year, implying the company became more capital intensive as competition picked up
3. High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens

At $41.44 per share, Advance Auto Parts trades at 14.9x forward P/E. Check out our free in-depth research report to learn more about why AAP doesn’t pass our bar.

Macy's (M)

Forward P/E Ratio: 10.6x

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 Pass on M?

1. Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
2. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
3. Earnings per share have dipped by 22.4% annually over the past three years, which is concerning because stock prices follow EPS over the long term

Macy’s stock price of $23.30 implies a valuation ratio of 10.6x forward P/E. If you’re considering M for your portfolio, see our FREE research report to learn more.

Interface (TILE)

Forward P/E Ratio: 14.5x

Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ: TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.

Why Does TILE Give Us Pause?

1. Annual revenue growth of 3.3% over the last five years was below our standards for the business services sector
2. Estimated sales growth of 4.4% for the next 12 months is soft and implies weaker demand
3. Earnings per share lagged its peers over the last five years as they only grew by 6.2% annually

Interface is trading at $29.34 per share, or 14.5x forward P/E. Dive into our free research report to see why there are better opportunities than TILE.

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.