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華爾街日報3 Value Stocks We Approach with Caution
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. Keeping that in mind, here are three value stocks with poor fundamentals and some alternatives you should consider instead.
PagerDuty (PD)
Forward P/S Ratio: 2.5x
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE:PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
Why Is PD Not Exciting?
- Products, pricing, or go-to-market strategy may need some adjustments as its 3.8% average billings growth over the last year was weak
- Estimated sales growth of 2.8% for the next 12 months implies demand will slow from its two-year trend
- Suboptimal cost structure is highlighted by its history of operating margin losses
PagerDuty’s stock price of $13.31 implies a valuation ratio of 2.5x forward price-to-sales. If you’re considering PD for your portfolio, see our FREE research report to learn more.
Cars.com (CARS)
Forward EV/EBITDA Ratio: 5.4x
Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.
Why Are We Hesitant About CARS?
- Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its dealer customers were flat over the last two years
- Projected sales growth of 2.6% for the next 12 months suggests sluggish demand
- Earnings per share have contracted by 2% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
Cars.com is trading at $12.18 per share, or 5.4x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than CARS.
Kemper (KMPR)
Forward P/B Ratio: 0.9x
Originally known as Unitrin until rebranding in 2011, Kemper (NYSE:KMPR) is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.
Why Do We Pass on KMPR?
- Stagnant net premiums earned over the last five years suggest the firm needs alternative growth strategies
- Sales over the last five years were less profitable as its earnings per share fell by 4.7% annually while its revenue was flat
- Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 7.3% annually over the last five years
At $40.80 per share, Kemper trades at 0.9x forward P/B. To fully understand why you should be careful with KMPR, check out our full research report (it’s free for active Edge members).
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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