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. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
Health Catalyst (HCAT)
Forward P/S Ratio: 0.5x
Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ: HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.
Why Should You Dump HCAT?
- Sales trends were unexciting over the last two years as its 4.4% annual growth was well below the typical software company
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Cash burn makes us question whether it can achieve sustainable long-term growth
Health Catalyst is trading at $2.33 per share, or 0.5x forward price-to-sales. Read our free research report to see why you should think twice about including HCAT in your portfolio.
Edgewell Personal Care (EPC)
Forward P/E Ratio: 7.2x
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE: EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Why Is EPC Risky?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 4.5 percentage points
- 5.9 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
At $16.81 per share, Edgewell Personal Care trades at 7.2x forward P/E. Dive into our free research report to see why there are better opportunities than EPC.
Jackson Financial (JXN)
Forward P/B Ratio: 0.7x
Spun off from British insurer Prudential plc in 2021 after more than 60 years as its U.S. subsidiary, Jackson Financial (NYSE: JXN) offers annuity products and retirement solutions that help Americans grow and protect their retirement savings and income.
Why Does JXN Worry Us?
- Growth in insurance policies was lackluster over the last two years as its 2.5% annual growth underperformed the typical financial institution
- Efficiency has decreased over the last four years as its pre-tax profit margin fell by 26.1 percentage points
- Earnings per share have contracted by 1.9% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
Jackson Financial’s stock price of $109.72 implies a valuation ratio of 0.7x forward P/B. If you’re considering JXN for your portfolio, see our FREE research report to learn more.
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 6 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-micro-cap company Tecnoglass (+1,754% 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.
