Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes 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.
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:
Appian (APPN)
Forward P/S Ratio: 2.3x
Powering billions of transactions daily since its founding in 1999, Appian (NASDAQ: APPN) provides a low-code platform that helps businesses automate complex processes and operationalize artificial intelligence without extensive programming knowledge.
Why Does APPN Worry Us?
- Estimated sales growth of 10.5% for the next 12 months implies demand will slow from its two-year trend
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 8.4% for the last year
At $26.28 per share, Appian trades at 2.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than APPN.
Chewy (CHWY)
Forward EV/EBITDA Ratio: 9.5x
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Does CHWY Fall Short?
- 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 7.1% for the last three years
- Estimated sales growth of 6.8% for the next 12 months is soft and implies weaker demand
- Gross margin of 29.6% is below its competitors, leaving less money to invest in areas like marketing and R&D
Chewy’s stock price of $21.00 implies a valuation ratio of 9.5x forward EV/EBITDA. If you’re considering CHWY for your portfolio, see our FREE research report to learn more.
One Value Stock to Buy:
BGC (BGC)
Forward P/E Ratio: 8.1x
Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ: BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.
Why Do We Love BGC?
- Impressive 24.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 24.6% annually
- Adequate return on equity shows management makes decent investment decisions
BGC is trading at $11.34 per share, or 8.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
