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. Keeping that in mind, here is one value stock offering a compelling risk-reward profile and two best left ignored.
Two Value Stocks to Sell:
GoPro (GPRO)
Forward P/E Ratio: 2.8x
Known for sponsoring extreme athletes, GoPro (NASDAQ: GPRO) is a camera company known for its POV videos and editing software.
Why Should You Dump GPRO?
- Performance surrounding its cameras sold has lagged its peers
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
GoPro is trading at $0.51 per share, or 2.8x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than GPRO.
Sanmina (SANM)
Forward P/E Ratio: 11.2x
Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Why Should You Sell SANM?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Gross margin of 8.1% reflects its high production costs
- Earnings per share have dipped by 1.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
At $73.58 per share, Sanmina trades at 11.2x forward price-to-earnings. If you’re considering SANM for your portfolio, see our FREE research report to learn more.
One Value Stock to Buy:
First Solar (FSLR)
Forward P/E Ratio: 6.2x
Headquartered in Arizona, First Solar (NASDAQ: FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.
Why Will FSLR Beat the Market?
- Annual revenue growth of 26.7% over the last two years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the annual growth in its earnings per share outpaced its revenue
- Cash burn has decreased over the last five years, showing the company is becoming a more self-sustaining business
First Solar’s stock price of $131.60 implies a valuation ratio of 6.2x forward price-to-earnings. Is now the time to initiate a position? Find out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
