Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune 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.
Separating the winners from the value traps is a tough challenge, and that’s where StockStory comes in. Our job is to find you high-quality companies that will stand the test of time. Keeping that in mind, here are three value stocks with little support and some other investments you should consider instead.
KB Home (KBH)
Forward P/E Ratio: 6.3x
The first homebuilder to be listed on the NYSE, KB Home (NYSE: KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
Why Should You Sell KBH?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 22.9% declines over the past two years
- Earnings per share have dipped by 5.3% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- 5.5 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
KB Home’s stock price of $50.62 implies a valuation ratio of 6.3x forward P/E. If you’re considering KBH for your portfolio, see our FREE research report to learn more.
Integra LifeSciences (IART)
Forward P/E Ratio: 4.6x
Founded in 1989 as a pioneer in regenerative medicine technology, Integra LifeSciences (NASDAQ: IART) develops and manufactures medical technologies for neurosurgery, wound care, and surgical reconstruction, including regenerative tissue products and surgical instruments.
Why Do We Avoid IART?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 1.2% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 17.1 percentage points
Integra LifeSciences is trading at $11.90 per share, or 4.6x forward P/E. To fully understand why you should be careful with IART, check out our full research report (it’s free).
Berkshire Hills Bancorp (BHLB)
Forward P/B Ratio: 0.9x
Founded in 1846 as a community financial institution in Massachusetts, Berkshire Hills Bancorp (NYSE: BHLB) is a regional bank holding company that provides commercial banking, retail banking, wealth management, and lending services through branches across the Northeast.
Why Does BHLB Give Us Pause?
- Net interest income trends were unexciting over the last four years as its 3.7% annual growth was below the typical bank company
- Forecasted tangible book value per share decline of 14.8% for the upcoming 12 months implies profitability will deteriorate significantly
- Flat ROE reflects management’s challenges in identifying attractive investment opportunities
At $23.89 per share, Berkshire Hills Bancorp trades at 0.9x forward P/B. Check out our free in-depth research report to learn more about why BHLB 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 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.
