Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes 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.

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 are three value stocks with poor fundamentals and some alternatives you should consider instead.

Resideo (REZI)

Forward P/E Ratio: 9.6x

Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.

Why Do We Think Twice About REZI?

1. Sales trends were unexciting over the last five years as its 7.5% annual growth was below the typical industrials company
2. Free cash flow margin dropped by 20.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Eroding returns on capital suggest its historical profit centers are aging

Resideo is trading at $30.66 per share, or 9.6x forward P/E. Check out our free in-depth research report to learn more about why REZI doesn’t pass our bar.

CONMED (CNMD)

Forward P/E Ratio: 7.6x

With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE: CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products.

Why Are We Wary of CNMD?

1. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
2. Modest revenue base of $1.37 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
3. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat

At $33.83 per share, CONMED trades at 7.6x forward P/E. Dive into our free research report to see why there are better opportunities than CNMD.

DHT Holdings (DHT)

Forward P/E Ratio: 6x

With each vessel capable of carrying roughly 2 million barrels of oil—enough to fill about 125 Olympic swimming pools—DHT Holdings (NYSE: DHT) operates very large crude carriers that transport crude oil across international routes for energy companies and traders.

Why Are We Hesitant About DHT?

1. Sales stagnated over the last five years and signal the need for new growth strategies
2. Revenue base of $448 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. High extraction costs and unfavorable asset economics are reflected in its low gross margin of 33.5%

DHT Holdings’s stock price of $17.25 implies a valuation ratio of 6x forward P/E. Read our free research report to see why you should think twice about including DHT in your portfolio.

High-Quality Stocks for All Market Conditions

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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.