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. That said, here is one value stock trading at a big discount to its intrinsic value and two with little support.

Two Value Stocks to Sell:

NXP Semiconductors (NXPI)

Forward P/E Ratio: 13.9x

Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.

Why Does NXPI Worry Us?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.3% annually over the last two years
2. Forecasted revenue decline of 5.3% for the upcoming 12 months implies demand will fall even further
3. 8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

At $187.58 per share, NXP Semiconductors trades at 13.9x forward price-to-earnings. To fully understand why you should be careful with NXPI, check out our full research report (it’s free).

Hillman (HLMN)

Forward P/E Ratio: 13.8x

Established when Max Hillman purchased a franchise operation, Hillman (NASDAQ: HLMN) designs, manufactures, and sells industrial equipment and systems for various sectors.

Why Are We Cautious About HLMN?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Subpar operating margin of 3.7% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Hillman’s stock price of $7.21 implies a valuation ratio of 13.8x forward price-to-earnings. Read our free research report to see why you should think twice about including HLMN in your portfolio.

One Value Stock to Watch:

Amgen (AMGN)

Forward P/E Ratio: 13.3x

Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ: AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.

Why Are We Positive On AMGN?

1. 12.7% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
2. Robust free cash flow margin of 32.2% gives it many options for capital deployment
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Amgen is trading at $277.27 per share, or 13.3x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.