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 with little support and some other investments you should consider instead.
RE/MAX (RMAX)
Forward P/E Ratio: 5.7x
Short for Real Estate Maximums, RE/MAX (NYSE: RMAX) operates a real estate franchise network spanning over 100 countries and territories.
Why Are We Out on RMAX?
- Demand for its offerings was relatively low as its number of agents has underwhelmed
- Earnings per share fell by 7.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin is forecasted to shrink by 8 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
At $7.48 per share, RE/MAX trades at 5.7x forward P/E. If you’re considering RMAX for your portfolio, see our FREE research report to learn more.
Acadia Healthcare (ACHC)
Forward P/E Ratio: 8.7x
With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ: ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.
Why Is ACHC Not Exciting?
- Underwhelming admissions over the past two years imply it may need to invest in improvements to get back on track
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 5.2 percentage points
- Free cash flow margin shrank by 21.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Acadia Healthcare is trading at $13.59 per share, or 8.7x forward P/E. Read our free research report to see why you should think twice about including ACHC in your portfolio.
Forestar Group (FOR)
Forward P/E Ratio: 9.6x
As a majority-owned subsidiary of homebuilding giant D.R. Horton, Forestar Group (NYSE: FOR) develops and sells finished residential lots to homebuilders, focusing primarily on land acquisition and development for single-family homes.
Why Do We Pass on FOR?
- Number of lots sold averaged -26.8% growth over the past two years and imply healthy demand for its products
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Stagnant returns on capital show management has failed to improve the company’s business quality
Forestar Group’s stock price of $28.94 implies a valuation ratio of 9.6x forward P/E. Dive into our free research report to see why there are better opportunities than FOR.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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