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 trading at a big discount to its intrinsic value and two with little support.
Two Value Stocks to Sell:
Flowers Foods (FLO)
Forward P/E Ratio: 14.7x
With Wonder Bread as its premier brand, Flower Foods (NYSE: FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.
Why Does FLO Fall Short?
- Shrinking unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share were flat over the last three years and fell short of the peer group average
At $17.14 per share, Flowers Foods trades at 14.7x forward P/E. If you’re considering FLO for your portfolio, see our FREE research report to learn more.
D.R. Horton (DHI)
Forward P/E Ratio: 9.5x
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.
Why Does DHI Give Us Pause?
- Backlog has dropped by 19.4% on average over the past two years, suggesting it’s losing orders as competition picks up
- Earnings per share have dipped by 5.6% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
D.R. Horton is trading at $124.93 per share, or 9.5x forward P/E. Read our free research report to see why you should think twice about including DHI in your portfolio.
One Value Stock to Watch:
Altria (MO)
Forward P/E Ratio: 11.2x
Best known for its Marlboro brand of cigarettes, Altria (NYSE: MO) offers tobacco and nicotine products.
Why Are We Positive On MO?
- Differentiated product offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 70.2%
- Excellent operating margin of 53.6% highlights the efficiency of its business model
- Robust free cash flow margin of 42.9% gives it many options for capital deployment
Altria’s stock price of $59.94 implies a valuation ratio of 11.2x forward P/E. Is now the time to initiate a position? See for yourself 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 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
