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.
This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. That said, here are two value stocks trading at big discounts to their intrinsic values and one climbing an uphill battle.
One Value Stock to Sell:
Genpact (G)
Forward P/E Ratio: 10.8x
Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE: G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions.
Why Do We Think Twice About G?
- Projected sales growth of 4.9% for the next 12 months suggests sluggish demand
- Free cash flow margin dropped by 3.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Genpact is trading at $39.75 per share, or 10.8x forward P/E. Read our free research report to see why you should think twice about including G in your portfolio.
Two Value Stocks to Watch:
Amgen (AMGN)
Forward P/E Ratio: 14.2x
Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ: AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.
Why Are We Positive On AMGN?
- 14.6% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Economies of scale give it some operating leverage when demand rises
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $291.10 per share, Amgen trades at 14.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Federated Hermes (FHI)
Forward P/E Ratio: 10.3x
With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE: FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.
Why Could FHI Be a Winner?
- Performance over the past two years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
Federated Hermes’s stock price of $48.15 implies a valuation ratio of 10.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
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-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
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