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 is one value stock offering a compelling risk-reward profile and two climbing an uphill battle.
Two Value Stocks to Sell:
Royalty Pharma (RPRX)
Forward P/E Ratio: 7.3x
Pioneering a unique business model in the pharmaceutical industry since 1996, Royalty Pharma (NASDAQ: RPRX) acquires rights to receive portions of sales from successful biopharmaceutical products, providing funding to drug developers without conducting research itself.
Why Does RPRX Worry Us?
- Annual sales declines of 1.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Modest revenue base of $2.31 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
At $36.59 per share, Royalty Pharma trades at 7.3x forward P/E. Read our free research report to see why you should think twice about including RPRX in your portfolio.
Sixth Street Specialty Lending (TSLX)
Forward P/E Ratio: 11.6x
Originally launched as TPG Specialty Lending before rebranding in 2020, Sixth Street Specialty Lending (NYSE: TSLX) is a business development company that provides customized financing solutions to middle-market companies across various industries.
Why Does TSLX Fall Short?
- Performance over the past five years shows its incremental sales were less profitable, as its 3.1% annual earnings per share growth trailed its revenue gains
Sixth Street Specialty Lending is trading at $24.02 per share, or 11.6x forward P/E. Check out our free in-depth research report to learn more about why TSLX doesn’t pass our bar.
One Value Stock to Watch:
KBR (KBR)
Forward P/E Ratio: 13.3x
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Why Are We Fans of KBR?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.9% annual sales growth over the last two years
- Operating margin improvement of 6.3 percentage points over the last five years demonstrates its ability to scale efficiently
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
KBR’s stock price of $51.06 implies a valuation ratio of 13.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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
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