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.
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 little support and some other investments you should consider instead.
Leggett & Platt (LEG)
Forward P/E Ratio: 8.4x
Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer of products and components for various industries.
Why Should You Sell LEG?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 11.8% annually
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Leggett & Platt is trading at $9.87 per share, or 8.4x forward P/E. If you’re considering LEG for your portfolio, see our FREE research report to learn more.
HP (HPQ)
Forward P/E Ratio: 8.6x
Born from the legendary Silicon Valley garage startup founded by Bill Hewlett and Dave Packard in 1939, HP (NYSE:HPQ) designs and sells personal computers, printers, and related technology products and services to consumers, businesses, and enterprises worldwide.
Why Should You Dump HPQ?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.6%
- Earnings per share fell by 2% annually over the last two years while its revenue was flat, showing each sale was less profitable
At $28.88 per share, HP trades at 8.6x forward P/E. To fully understand why you should be careful with HPQ, check out our full research report (it’s free).
P10 (PX)
Forward P/E Ratio: 12.8x
Operating as a bridge between institutional investors and hard-to-access private market opportunities, P10 (NYSE:PX) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.
Why Are We Wary of PX?
- Low return on equity reflects management’s struggle to allocate funds effectively
P10’s stock price of $12.20 implies a valuation ratio of 12.8x forward P/E. Read our free research report to see why you should think twice about including PX in your portfolio.
High-Quality Stocks for All Market Conditions
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