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. Keeping that in mind, here are three value stocks with little support and some other investments you should consider instead.
Wabash (WNC)
Forward P/E Ratio: 9.1x
With its first trailer reportedly built on two sawhorses, Wabash (NYSE: WNC) offers semi trailers, liquid transportation containers, truck bodies, and equipment for moving goods.
Why Are We Out on WNC?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 32.8% decline in its backlog
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 13.9%
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 29.5% annually, worse than its revenue
Wabash’s stock price of $8.67 implies a valuation ratio of 9.1x forward P/E. Read our free research report to see why you should think twice about including WNC in your portfolio.
Taylor Morrison Home (TMHC)
Forward P/E Ratio: 6.4x
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.
Why Is TMHC Not Exciting?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 13% declines over the past two years
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- 9.4 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
Taylor Morrison Home is trading at $56.20 per share, or 6.4x forward P/E. Dive into our free research report to see why there are better opportunities than TMHC.
Diebold Nixdorf (DBD)
Forward P/E Ratio: 12.2x
With roots dating back to 1859 and a presence in over 100 countries, Diebold Nixdorf (NYSE: DBD) provides automated self-service technology, software, and services that help banks and retailers digitize their customer transactions.
Why Does DBD Fall Short?
- Sales tumbled by 2.9% annually over the last five years, showing market trends are working against its favor during this cycle
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Negative returns on capital show management lost money while trying to expand the business
At $48.17 per share, Diebold Nixdorf trades at 12.2x forward P/E. Check out our free in-depth research report to learn more about why DBD doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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.
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