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.
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 are three value stocks with little support and some other investments you should consider instead.
Dole (DOLE)
Forward P/E Ratio: 9.7x
Known for its delicious pineapples and Hawaiian roots, Dole (NYSE:DOLE) is a global agricultural company specializing in fresh fruits and vegetables.
Why Do We Steer Clear of DOLE?
- Products have few die-hard fans as sales have declined by 3% annually over the last three years
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 8.4% that must be offset through higher volumes
At $13.48 per share, Dole trades at 9.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than DOLE.
Textron (TXT)
Forward P/E Ratio: 10.7x
Listed on the NYSE in 1947, Textron (NYSE:TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.
Why Are We Cautious About TXT?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales growth of 7% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last five years as they only grew by 7.9% annually
Textron’s stock price of $64.82 implies a valuation ratio of 10.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why TXT doesn’t pass our bar.
Tutor Perini (TPC)
Forward P/E Ratio: 13.9x
Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE:TPC) is a civil and building construction company offering diversified general contracting and design-build services.
Why Should You Sell TPC?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
Tutor Perini is trading at $20.82 per share, or 13.9x forward price-to-earnings. If you’re considering TPC for your portfolio, see our FREE research report to learn more.
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 9 Market-Beating Stocks. 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.