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.

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 poor fundamentals and some alternatives you should consider instead.

Upland (UPLD)

Forward P/S Ratio: 0.3x

Founder Jack McDonald’s second software rollup, Upland Software (NASDAQ: UPLD) is a one stop shop for sales and marketing software, project management, HR, and contact center services for small and medium sized businesses.

Why Does UPLD Give Us Pause?

1. Sales tumbled by 6.8% annually over the last three years, showing industry trends like AI are working against its favor
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Suboptimal cost structure is highlighted by its history of operating margin losses

At $1.88 per share, Upland trades at 0.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than UPLD.

Best Buy (BBY)

Forward P/E Ratio: 11.5x

With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.

Why Are We Cautious About BBY?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Gross margin of 22.4% is an output of its commoditized inventory
3. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability

Best Buy is trading at $71.89 per share, or 11.5x forward P/E. If you’re considering BBY for your portfolio, see our FREE research report to learn more.

Graphic Packaging Holding (GPK)

Forward P/E Ratio: 10.4x

Founded in 1991, Graphic Packaging (NYSE: GPK) is a provider of paper-based packaging solutions for a wide range of products.

Why Do We Pass on GPK?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Earnings per share have dipped by 10.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Free cash flow margin dropped by 8.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Graphic Packaging Holding’s stock price of $22.63 implies a valuation ratio of 10.4x forward P/E. To fully understand why you should be careful with GPK, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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