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.
Separating the winners from the value traps is a tough challenge, and that’s where StockStory comes in. Our job is to find you high-quality companies that will stand the test of time. Keeping that in mind, here is one value stock offering a compelling risk-reward profile and two facing an uphill battle.
Two Value Stocks to Sell:
Bumble (BMBL)
Forward EV/EBITDA Ratio: 2.7x
Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ: BMBL) is a leading dating app built with women at the center.
Why Does BMBL Worry Us?
- Intense competition is diverting traffic from its platform as its paying users fell by 3.1% annually
- Key performance metrics have been flashing red recently as its average revenue per buyer dropped by 16.8% annually while engagement was weak
- Sales are projected to tank by 10.5% over the next 12 months as demand evaporates further
At $3.06 per share, Bumble trades at 2.7x forward EV/EBITDA. Read our free research report to see why you should think twice about including BMBL in your portfolio.
Atlanticus Holdings (ATLC)
Forward P/E Ratio: 9.3x
Using data analytics to serve the millions of Americans with less-than-perfect credit scores, Atlanticus Holdings (NASDAQ: ATLC) provides technology and services that help lenders offer credit products to consumers often overlooked by traditional financing providers.
Why Are We Cautious About ATLC?
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
Atlanticus Holdings is trading at $99.71 per share, or 9.3x forward P/E. If you’re considering ATLC for your portfolio, see our FREE research report to learn more.
One Value Stock to Buy:
Snap (SNAP)
Forward EV/EBITDA Ratio: 7x
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Why Is SNAP a Good Business?
- Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 11.9%, and its rise over the last few years was fueled by some leverage on its fixed costs
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 24.5% annually, topping its revenue gains
- Free cash flow margin jumped by 8.8 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Snap’s stock price of $4.74 implies a valuation ratio of 7x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
