1 Value Stock to Consider Right Now and 2 Facing Headwinds
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.
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 is one value stock trading at a big discount to its intrinsic value and two best left ignored.
Two Value Stocks to Sell:
Five9 (FIVN)
Forward P/S Ratio: 1.7x
Taking its name from the "five nines" (99.999%) standard for optimal service reliability in telecommunications, Five9 (NASDAQ:FIVN) provides cloud-based software that enables businesses to run their contact centers with tools for customer service, sales, and marketing across multiple communication channels.
Why Do We Pass on FIVN?
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.4% average billings growth over the last year was weak
- Estimated sales growth of 10.1% for the next 12 months implies demand will slow from its two-year trend
- Gross margin of 55.5% is way below its competitors, leaving less money to invest in areas like marketing and R&D
Five9 is trading at $25.12 per share, or 1.7x forward price-to-sales. Check out our free in-depth research report to learn more about why FIVN doesn’t pass our bar.
Comcast (CMCSA)
Forward P/E Ratio: 6.9x
Formerly known as American Cable Systems, Comcast (NASDAQ:CMCSA) is a multinational telecommunications company offering a wide range of services.
Why Do We Think CMCSA Will Underperform?
- Number of domestic broadband customers has disappointed over the past two years, indicating weak demand for its offerings
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 3.7 percentage points over the next year
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $23.83 per share, Comcast trades at 6.9x forward P/E. Read our free research report to see why you should think twice about including CMCSA in your portfolio.
One Value Stock to Watch:
Elevance Health (ELV)
Forward P/E Ratio: 13.8x
Formerly known as Anthem until its 2022 rebranding, Elevance Health (NYSE:ELV) is one of America's largest health insurers, serving approximately 47 million medical members through its network-based managed care plans.
Why Do We Like ELV?
- Unparalleled scale of $198.7 billion in revenue enables it to spread administrative costs across a larger membership base
- Earnings per share have outperformed the peer group average over the last five years, increasing by 7.2% annually
- ROIC punches in at 25.9%, illustrating management’s expertise in identifying profitable investments
Elevance Health’s stock price of $374.80 implies a valuation ratio of 13.8x 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.