The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.
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 with little support and some other investments you should consider instead.
Health Catalyst (HCAT)
Forward P/S Ratio: 0.7x
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 Do We Steer Clear of HCAT?
- 6% annual revenue growth over the last three years was slower than its software peers
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Health Catalyst’s stock price of $2.89 implies a valuation ratio of 0.7x forward price-to-sales. To fully understand why you should be careful with HCAT, check out our full research report (it’s free).
Accel Entertainment (ACEL)
Forward P/E Ratio: 11.4x
Established in Illinois, Accel Entertainment (NYSE:ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Why Does ACEL Worry Us?
- Sluggish trends in its video gaming terminals sold suggest customers aren’t adopting its solutions as quickly as the company hoped
- Estimated sales growth of 6.4% for the next 12 months is soft and implies weaker demand
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Accel Entertainment is trading at $10.92 per share, or 11.4x forward P/E. Read our free research report to see why you should think twice about including ACEL in your portfolio.
T. Rowe Price (TROW)
Forward P/E Ratio: 12.8x
Founded in 1937 by Thomas Rowe Price Jr., who pioneered the growth stock investing approach, T. Rowe Price (NASDAQ:TROW) is an investment management firm that offers mutual funds, advisory services, and retirement planning solutions to individuals and institutions.
Why Does TROW Give Us Pause?
- 4.3% annual revenue growth over the last five years was slower than its financials peers
- Incremental sales over the last five years were less profitable as its 2.8% annual earnings per share growth lagged its revenue gains
At $103.69 per share, T. Rowe Price trades at 12.8x forward P/E. Dive into our free research report to see why there are better opportunities than TROW.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-micro-cap company Kadant (+351% 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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