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. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

United Airlines (UAL)

Forward P/E Ratio: 7.4x

Founded in 1926, United Airlines Holdings (NASDAQ: UAL) operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.

Why Do We Think UAL Will Underperform?

1. 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 4.9% for the last two years
2. Subpar operating margin of 8.4% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year

United Airlines is trading at $94.06 per share, or 7.4x forward P/E. Read our free research report to see why you should think twice about including UAL in your portfolio.

First Merchants (FRME)

Forward P/B Ratio: 0.8x

Dating back to 1893 when it first opened its doors in Indiana, First Merchants (NASDAQ: FRME) is a Midwest regional bank providing commercial, consumer, and wealth management services through branches in Indiana, Ohio, Michigan, and Illinois.

Why Should You Sell FRME?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. 7% annual net interest income growth over the last five years was slower than its banking peers
3. Flat earnings per share over the last two years lagged its peers

First Merchants’s stock price of $37.86 implies a valuation ratio of 0.8x forward P/B. To fully understand why you should be careful with FRME, check out our full research report (it’s free).

Walker & Dunlop (WD)

Forward P/B Ratio: 0.8x

Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.

Why Do We Avoid WD?

1. Net interest income tumbled by 40.1% annually over the last five years, showing market trends are working against its favor during this cycle
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 14.6% annually
3. Tangible book value per share tumbled by 6.8% annually over the last five years, showing banking sector trends are working against its favor during this cycle

At $44.51 per share, Walker & Dunlop trades at 0.8x forward P/B. Read our free research report to see why you should think twice about including WD in your portfolio.

Stocks We Like More

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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.