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. That said, here is one value stock offering a compelling risk-reward profile and two climbing an uphill battle.
Two Value Stocks to Sell:
Target (TGT)
Forward P/E Ratio: 12.7x
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Why Is TGT Not Exciting?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Gross margin of 28.1% is below its competitors, leaving less money for marketing and promotions
- Earnings per share fell by 4.2% annually over the last six years while its revenue grew, showing its incremental sales were much less profitable
Target is trading at $97.15 per share, or 12.7x forward P/E. Dive into our free research report to see why there are better opportunities than TGT.
Kennametal (KMT)
Forward P/E Ratio: 14.7x
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE:KMT) is a provider of industrial materials and tools for various sectors.
Why Are We Out on KMT?
- 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
- Estimated sales growth of 1.4% for the next 12 months is soft and implies weaker demand
- Earnings per share have dipped by 5.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
Kennametal’s stock price of $21.51 implies a valuation ratio of 14.7x forward P/E. To fully understand why you should be careful with KMT, check out our full research report (it’s free).
One Value Stock to Buy:
Aris Water (ARIS)
Forward P/E Ratio: 14.9x
Primarily serving the oil and gas industry, Aris Water (NYSE:ARIS) is a provider of water handling and recycling solutions.
Why Will ARIS Beat the Market?
- Impressive 23.8% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 30.4% over the last two years outstripped its revenue performance
- Free cash flow margin increased by 38.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $23.86 per share, Aris Water trades at 14.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 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-small-cap company Comfort Systems (+782% 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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