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.
This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. That said, here is one value stock offering a compelling risk-reward profile and two best left ignored.
Two Value Stocks to Sell:
ADT (ADT)
Forward P/E Ratio: 9.4x
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE:ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Is ADT Not Exciting?
- Performance surrounding its customers has lagged its peers
- Estimated sales growth of 3.8% for the next 12 months is soft and implies weaker demand
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $8.53 per share, ADT trades at 9.4x forward P/E. Read our free research report to see why you should think twice about including ADT in your portfolio.
Ingram Micro (INGM)
Forward P/E Ratio: 7.2x
Operating as the crucial link in the global technology supply chain with a presence in 57 countries, Ingram Micro (NYSE:INGM) is a global technology distributor that connects manufacturers with resellers, providing hardware, software, cloud services, and logistics expertise.
Why Are We Out on INGM?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2% for the last five years
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 14.5% annually while its revenue grew
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.4% for the last five years
Ingram Micro is trading at $21.70 per share, or 7.2x forward P/E. Check out our free in-depth research report to learn more about why INGM doesn’t pass our bar.
One Value Stock to Buy:
Lululemon (LULU)
Forward P/E Ratio: 13.5x
Originally serving yogis and hockey players, Lululemon (NASDAQ:LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Is LULU a Top Pick?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 5.3% growth over the past two years
- Differentiated product assortment is reflected in its best-in-class gross margin of 58.8%
- Robust free cash flow margin of 13.7% gives it many options for capital deployment
Lululemon’s stock price of $163.95 implies a valuation ratio of 13.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. 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 Exlservice (+354% 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
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