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.

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

ADT (ADT)

Forward P/E Ratio: 9.5x

Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE: ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.

Why Does ADT Worry Us?

1. Performance surrounding its customers has lagged its peers
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.3%
3. ROIC of 5.2% reflects management’s challenges in identifying attractive investment opportunities

At $8.16 per share, ADT trades at 9.5x forward P/E. Check out our free in-depth research report to learn more about why ADT doesn’t pass our bar.

Silgan Holdings (SLGN)

Forward P/E Ratio: 13.2x

Established in 1987, Silgan Holdings (NYSE: SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.

Why Should You Sell SLGN?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 3% annually over the last two years
2. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
3. Earnings per share have contracted by 2.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

Silgan Holdings is trading at $54.91 per share, or 13.2x forward P/E. Dive into our free research report to see why there are better opportunities than SLGN.

Installed Building Products (IBP)

Forward P/E Ratio: 14.6x

Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.

Why Are We Wary of IBP?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Sales are projected to tank by 2.8% over the next 12 months as demand evaporates
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.5% annually

Installed Building Products’s stock price of $155.38 implies a valuation ratio of 14.6x forward P/E. If you’re considering IBP for your portfolio, see our FREE research report to learn more.

Stocks We Like 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 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 176% over the last five years.

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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.