1 Value Stock on Our Buy List and 2 to Ignore

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 is one value stock trading at a big discount to its intrinsic value and two climbing an uphill battle.

Two Value Stocks to Sell:

ArcBest (ARCB)

Forward P/E Ratio: 9.2x

Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ:ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.

Why Do We Steer Clear of ARCB?

1. Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
2. Earnings per share have contracted by 32.9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Eroding returns on capital suggest its historical profit centers are aging

At $61 per share, ArcBest trades at 9.2x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ARCB.

Dentsply Sirona (XRAY)

Forward P/E Ratio: 7.3x

With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ:XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.

Why Is XRAY Risky?

1. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 7.4% annually, worse than its revenue
3. Negative returns on capital show management lost money while trying to expand the business, and its falling returns suggest its earlier profit pools are drying up

Dentsply Sirona is trading at $14.28 per share, or 7.3x forward price-to-earnings. Check out our free in-depth research report to learn more about why XRAY doesn’t pass our bar.

One Value Stock to Buy:

Magnite (MGNI)

Forward P/E Ratio: 12.7x

Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ:MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.

Why Should You Buy MGNI?

1. Annual revenue growth of 33.7% over the past five years was outstanding, reflecting market share gains this cycle
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 77.3% outpaced its revenue gains
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy

Magnite’s stock price of $12.10 implies a valuation ratio of 12.7x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

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 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.