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.
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 with strong fundamentals and one best left ignored.
One Value Stock to Sell:
CVS Health (CVS)
Forward P/E Ratio: 9.9x
With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE: CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary.
Why Is CVS Not Exciting?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 7% for the last two years
- Estimated sales growth of 2.5% for the next 12 months implies demand will slow from its two-year trend
- Earnings per share fell by 2.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
CVS Health is trading at $60.80 per share, or 9.9x forward P/E. To fully understand why you should be careful with CVS, check out our full research report (it’s free).
Two Value Stocks to Watch:
United Parks & Resorts (PRKS)
Forward P/E Ratio: 9.4x
Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE: PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.
Why Could PRKS Be a Winner?
- Excellent operating margin of 26.9% highlights the efficiency of its business model
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 39.1% exceeded its revenue gains over the last five years
- Rising returns on capital show management is finding more attractive investment opportunities
At $45.76 per share, United Parks & Resorts trades at 9.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
BioMarin Pharmaceutical (BMRN)
Forward P/E Ratio: 12.9x
Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ: BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.
Why Are We Fans of BMRN?
- Annual revenue growth of 16.5% over the last two years was superb and indicates its market share increased during this cycle
- Additional sales over the last five years increased its profitability as the 22.8% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 14.9 percentage points over the last five years, giving the company more chips to play with
BioMarin Pharmaceutical’s stock price of $57.56 implies a valuation ratio of 12.9x forward P/E. 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 Strong Momentum Stocks for this week. 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.
