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.
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. That said, here are three value stocks with little support and some other investments you should consider instead.
Paramount (PARA)
Forward P/E Ratio: 7.9x
Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ:PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.
Why Do We Steer Clear of PARA?
- Annual revenue declines of 2.3% over the last two years indicate problems with its market positioning
- Earnings per share fell by 22.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Paramount is trading at $11.87 per share, or 7.9x forward P/E. Check out our free in-depth research report to learn more about why PARA doesn’t pass our bar.
Xponential Fitness (XPOF)
Forward P/E Ratio: 7.3x
Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.
Why Are We Hesitant About XPOF?
- Sales trends were unexciting over the last two years as its 9.3% annual growth was below the typical consumer discretionary company
- Operating margin of 0.1% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Negative returns on capital show management lost money while trying to expand the business
At $8.34 per share, Xponential Fitness trades at 7.3x forward P/E. Read our free research report to see why you should think twice about including XPOF in your portfolio.
General Motors (GM)
Forward P/E Ratio: 4.5x
Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Is GM Not Exciting?
- Disappointing unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Sales are projected to tank by 5.3% over the next 12 months as demand evaporates
- Gross margin of 12.5% is below its competitors, leaving less money to invest in areas like marketing and R&D
General Motors’s stock price of $48.70 implies a valuation ratio of 4.5x forward P/E. To fully understand why you should be careful with GM, check out our full research report (it’s free).
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 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today