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.
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 two value stocks offering compelling risk-reward profiles and one best left ignored.
One Value Stock to Sell:
Udemy (UDMY)
Forward EV/EBITDA Ratio: 8.4x
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Why Does UDMY Fall Short?
- Preference for prioritizing user growth over monetization has led to 1.7% annual drops in its average revenue per buyer
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
Udemy’s stock price of $5.01 implies a valuation ratio of 8.4x forward EV/EBITDA. To fully understand why you should be careful with UDMY, check out our full research report (it’s free for active Edge members).
Two Value Stocks to Watch:
KBR (KBR)
Forward P/E Ratio: 10.3x
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Why Are We Positive On KBR?
- Operating margin expanded by 6.6 percentage points over the last five years as it scaled and became more efficient
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.9% exceeded its revenue gains over the last five years
- Returns on capital are climbing as management makes more lucrative bets
At $39.86 per share, KBR trades at 10.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
NerdWallet (NRDS)
Forward P/E Ratio: 9.9x
Born from founder Tim Chen's frustration with the lack of transparent credit card information when helping his sister in 2009, NerdWallet (NASDAQ:NRDS) is a digital platform that provides financial guidance to help consumers and small businesses make smarter decisions about credit cards, loans, insurance, and other financial products.
Why Could NRDS Be a Winner?
- Annual revenue growth of 26.5% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 266% outpaced its revenue gains
NerdWallet is trading at $14.39 per share, or 9.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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