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. That said, here is one value stock trading at a big discount to its intrinsic value and two with little support.
Two Value Stocks to Sell:
UFP Industries (UFPI)
Forward P/E Ratio: 14.6x
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ: UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.
Why Does UFPI Worry Us?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Earnings per share have dipped by 21.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
UFP Industries’s stock price of $105 implies a valuation ratio of 14.6x forward P/E. If you’re considering UFPI for your portfolio, see our FREE research report to learn more.
Incyte (INCY)
Forward P/E Ratio: 12x
Founded in 1991 and evolving from a genomics research firm to a commercial-stage drug developer, Incyte (NASDAQ: INCY) is a biopharmaceutical company that discovers, develops, and commercializes proprietary therapeutics for cancer and inflammatory diseases.
Why Are We Hesitant About INCY?
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 15.2 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 14.2 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Incyte is trading at $70.70 per share, or 12x forward P/E. Dive into our free research report to see why there are better opportunities than INCY.
One Value Stock to Watch:
Gilead Sciences (GILD)
Forward P/E Ratio: 13.9x
From its groundbreaking work in developing the first single-tablet regimens for HIV treatment, Gilead Sciences (NASDAQ: GILD) develops and markets innovative medicines for life-threatening diseases including HIV, viral hepatitis, COVID-19, and cancer.
Why Do We Like GILD?
- Revenue base of $28.74 billion gives it economies of scale and some negotiating power
- Adjusted operating margin profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Strong free cash flow margin of 33.2% enables it to reinvest or return capital consistently
At $113.40 per share, Gilead Sciences trades at 13.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2024 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 Exlservice (+354% 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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