3 Value Stocks with Questionable Fundamentals

Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor. The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.

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. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

Qorvo (QRVO)

Forward P/E Ratio: 14.1x

Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.

Why Are We Out on QRVO?

1. Annual revenue growth of 2.8% over the last five years was below our standards for the semiconductor sector
2. Efficiency has decreased over the last five years as its operating margin fell by 20 percentage points
3. 14.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Qorvo is trading at $78.40 per share, or 14.1x forward P/E. Read our free research report to see why you should think twice about including QRVO in your portfolio.

J. M. Smucker (SJM)

Forward P/E Ratio: 11.1x

Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.

Why Does SJM Worry Us?

1. Muted 3.7% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
3. Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up

J. M. Smucker’s stock price of $112.79 implies a valuation ratio of 11.1x forward P/E. If you’re considering SJM for your portfolio, see our FREE research report to learn more.

Pediatrix Medical Group (MD)

Forward P/E Ratio: 9.6x

With a network of approximately 2,620 affiliated physicians caring for some of the most vulnerable patients, Pediatrix Medical Group (NYSE:MD) provides specialized physician services focused on neonatal, maternal-fetal, pediatric cardiology and other pediatric subspecialty care across 37 states.

Why Do We Avoid MD?

1. Disappointing comparable store sales over the past two years show customers aren’t responding well to its offerings and value proposition
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 11.7% annually while its revenue grew
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $14.88 per share, Pediatrix Medical Group trades at 9.6x forward P/E. Check out our free in-depth research report to learn more about why MD doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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 176% over the last five years.

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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.