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.
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 climbing an uphill battle and some other investments you should look into instead.
Harley-Davidson (HOG)
Forward P/E Ratio: 7.7x
Founded in 1903, Harley-Davidson (NYSE:HOG) is an American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.
Why Is HOG Risky?
- Performance surrounding its motorcycles sold has lagged its peers
- Diminishing returns on capital suggest its earlier profit pools are drying up
- High net-debt-to-EBITDA ratio of 13× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Harley-Davidson’s stock price of $25.04 implies a valuation ratio of 7.7x forward P/E. If you’re considering HOG for your portfolio, see our FREE research report to learn more.
Columbus McKinnon (CMCO)
Forward P/E Ratio: 6.1x
With 19 different brands across the globe, Columbus McKinnon (NASDAQ:CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
Why Do We Pass on CMCO?
- 1.4% annual revenue growth over the last two years was slower than its industrials peers
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1% annually
- 10.8 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 $16.26 per share, Columbus McKinnon trades at 6.1x forward P/E. To fully understand why you should be careful with CMCO, check out our full research report (it’s free).
HNI (HNI)
Forward P/E Ratio: 14.6x
With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE:HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.
Why Do We Think Twice About HNI?
- Annual revenue growth of 2.7% over the last five years was below our standards for the business services sector
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.2 percentage points
HNI is trading at $51.71 per share, or 14.6x forward P/E. Check out our free in-depth research report to learn more about why HNI doesn’t pass our bar.
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 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-small-cap company Comfort Systems (+782% 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