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. Keeping that in mind, here are three value stocks with poor fundamentals and some alternatives you should consider instead.
Laureate Education (LAUR)
Forward P/E Ratio: 14.8x
Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ: LAUR) is a global network of higher education institutions.
Why Does LAUR Fall Short?
- Demand for its offerings was relatively low as its number of enrolled students has underwhelmed
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 9.3% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $29.15 per share, Laureate Education trades at 14.8x forward P/E. Check out our free in-depth research report to learn more about why LAUR doesn’t pass our bar.
ASGN (ASGN)
Forward P/E Ratio: 9.6x
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE: ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
Why Do We Steer Clear of ASGN?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.8% annually over the last two years
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Earnings per share fell by 1.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
ASGN’s stock price of $45.41 implies a valuation ratio of 9.6x forward P/E. If you’re considering ASGN for your portfolio, see our FREE research report to learn more.
Invesco (IVZ)
Forward P/E Ratio: 10.4x
With roots dating back to 1935 when it pioneered the first mutual fund with an objective of capital growth, Invesco (NYSE: IVZ) is a global asset management firm that offers investment solutions across equities, fixed income, alternatives, and multi-asset strategies.
Why Are We Out on IVZ?
- Sales tumbled by 2.4% annually over the last five years, showing market trends are working against its favor during this cycle
- Earnings per share were flat over the last five years and fell short of the peer group average
- Underwhelming 5.8% return on equity reflects management’s difficulties in finding profitable growth opportunities
Invesco is trading at $23 per share, or 10.4x forward P/E. Read our free research report to see why you should think twice about including IVZ in your portfolio.
Stocks We Like More
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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