1 Value Stock with Impressive Fundamentals and 2 to Steer Clear Of

June 02, 2025 at 00:35 AM EDT

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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. Keeping that in mind, here is one value stock offering a compelling risk-reward profile and two climbing an uphill battle.

Two Value Stocks to Sell:

Baxter (BAX)

Forward P/E Ratio: 12.1x

With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE: BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.

Why Do We Pass on BAX?

Sales tumbled by 10.3% annually over the last two years, showing market trends are working against its favor during this cycle
Constant currency revenue growth has disappointed over the past two years and shows demand was soft
Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 9.2% annually, worse than its revenue

Baxter is trading at $30.50 per share, or 12.1x forward P/E. To fully understand why you should be careful with BAX, check out our full research report (it’s free).

Charles River Laboratories (CRL)

Forward P/E Ratio: 14.2x

Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.

Why Are We Wary of CRL?

Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
Sales are projected to tank by 2.7% over the next 12 months as demand evaporates further
Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $135.63 per share, Charles River Laboratories trades at 14.2x forward P/E. Check out our free in-depth research report to learn more about why CRL doesn’t pass our bar.

One Value Stock to Buy:

Blue Bird (BLBD)

Forward P/E Ratio: 9.1x

With around a century of experience, Blue Bird (NASDAQ: BLBD) is a manufacturer of school buses and complementary parts.

Why Is BLBD a Good Business?

Annual revenue growth of 16.5% over the last two years was superb and indicates its market share increased during this cycle
Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 156% outpaced its revenue gains
Returns on capital are climbing as management makes more lucrative bets

Blue Bird’s stock price of $38.71 implies a valuation ratio of 9.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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.

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