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.
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.
Vishay Intertechnology (VSH)
Forward P/E Ratio: 14.8x
Named after the founder's ancestral village in present-day Lithuania, Vishay Intertechnology (NYSE:VSH) manufactures simple chips and electronic components that are building blocks of virtually all types of electronic devices.
Why Are We Out on VSH?
- Muted 1.9% annual revenue growth over the last five years shows its demand lagged behind its semiconductor peers
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 25.3%
- 12.5 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
At $12.04 per share, Vishay Intertechnology trades at 14.8x forward price-to-earnings. Read our free research report to see why you should think twice about including VSH in your portfolio.
Reynolds (REYN)
Forward P/E Ratio: 13.5x
Best known for its aluminum foil, Reynolds (NASDAQ:REYN) is a household products company whose products focus on food storage, cooking, and waste.
Why Should You Dump REYN?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Free cash flow margin shrank by 4.4 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Reynolds’s stock price of $23.55 implies a valuation ratio of 13.5x forward price-to-earnings. To fully understand why you should be careful with REYN, check out our full research report (it’s free).
Progyny (PGNY)
Forward P/E Ratio: 13.8x
Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ:PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.
Why Do We Think Twice About PGNY?
- Subscale operations are evident in its revenue base of $1.17 billion, meaning it has fewer distribution channels than its larger rivals
- Estimated sales growth of 3.9% for the next 12 months implies demand will slow from its two-year trend
- Negative returns on capital show management lost money while trying to expand the business
Progyny is trading at $22.01 per share, or 13.8x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than PGNY.
Stocks We Like 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.