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 are three value stocks with little support and some other investments you should consider instead.
Kraft Heinz (KHC)
Forward P/E Ratio: 9.5x
The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ: KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.
Why Do We Pass on KHC?
- Declining unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 34.6 percentage points
- ROIC of 1.2% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging
Kraft Heinz’s stock price of $23.40 implies a valuation ratio of 9.5x forward P/E. Check out our free in-depth research report to learn more about why KHC doesn’t pass our bar.
Labcorp (LH)
Forward P/E Ratio: 14.7x
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE: LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Why Do We Think Twice About LH?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 12.3 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $250.24 per share, Labcorp trades at 14.7x forward P/E. If you’re considering LH for your portfolio, see our FREE research report to learn more.
Kroger (KR)
Forward P/E Ratio: 11.4x
With a sprawling network of over 2,400 locations offering digital pickup services, Kroger (NYSE: KR) operates supermarkets, pharmacies, and fuel centers across 35 states, offering customers groceries, household items, and private-label products.
Why Is KR Risky?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 23.7%
- Sales over the last three years were less profitable as its earnings per share fell by 29.8% annually while its revenue was flat
Kroger is trading at $61.12 per share, or 11.4x forward P/E. Dive into our free research report to see why there are better opportunities than KR.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
