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 is one value stock with strong fundamentals and two best left ignored.
Two Value Stocks to Sell:
Skechers (SKX)
Forward P/E Ratio: 14.5x
Synonymous with "dad shoe", Skechers (NYSE: SKX) is a footwear company renowned for its comfortable, stylish, and affordable shoes for all ages.
Why Is SKX Risky?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Estimated sales growth of 7.4% for the next 12 months implies demand will slow from its two-year trend
- Poor free cash flow margin of 4.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Skechers is trading at $62.04 per share, or 14.5x forward P/E. Check out our free in-depth research report to learn more about why SKX doesn’t pass our bar.
Mohawk Industries (MHK)
Forward P/E Ratio: 9.9x
Established in 1878, Mohawk Industries (NYSE: MHK) is a leading producer of floor-covering products for both residential and commercial applications.
Why Are We Out on MHK?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- ROIC of 3.5% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $100.61 per share, Mohawk Industries trades at 9.9x forward P/E. Dive into our free research report to see why there are better opportunities than MHK.
One Value Stock to Buy:
Sarepta Therapeutics (SRPT)
Forward P/E Ratio: 3.7x
Pioneering treatments for a devastating childhood muscle-wasting disease that primarily affects boys, Sarepta Therapeutics (NASDAQ: SRPT) develops and commercializes RNA-targeted therapies and gene therapies for rare genetic disorders, primarily Duchenne muscular dystrophy.
Why Are We Bullish on SRPT?
- Annual revenue growth of 51.3% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 38.8% annually over the last five years, massively outpacing its peers
- Cash burn has decreased over the last five years, showing the company is becoming a more self-sustaining business
Sarepta Therapeutics’s stock price of $37.50 implies a valuation ratio of 3.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
