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 are three value stocks climbing an uphill battle and some other investments you should look into instead.
MGM Resorts (MGM)
Forward P/E Ratio: 15.2x
Operating several properties on the Las Vegas Strip, MGM Resorts (NYSE: MGM) is a global hospitality and entertainment company known for its resorts and casinos.
Why Do We Steer Clear of MGM?
- Sizable revenue base leads to growth challenges as its 7.4% annual revenue increases over the last five years fell short of other consumer discretionary companies
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- 12× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $33.69 per share, MGM Resorts trades at 15.2x forward P/E. If you’re considering MGM for your portfolio, see our FREE research report to learn more.
Belden (BDC)
Forward P/E Ratio: 15.1x
With its enamel-coated copper wire used in WWI for the Allied forces, Belden (NYSE: BDC) designs, manufactures, and sells electronic components to various industries.
Why Is BDC Not Exciting?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.7% annually over the last two years
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.3%
- Earnings per share were flat over the last two years and fell short of the peer group average
Belden is trading at $109.48 per share, or 15.1x forward P/E. To fully understand why you should be careful with BDC, check out our full research report (it’s free).
Helios (HLIO)
Forward P/E Ratio: 14x
Founded on the principle of treating others as one wants to be treated, Helios (NYSE: HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Why Do We Think HLIO Will Underperform?
- 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
- Projected sales decline of 1.6% over the next 12 months indicates demand will continue deteriorating
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 2.3% annually
Helios’s stock price of $32.16 implies a valuation ratio of 14x forward P/E. Check out our free in-depth research report to learn more about why HLIO doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 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
