Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes 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. That said, here are two value stocks with strong fundamentals and one with little support.
One Value Stock to Sell:
Bandwidth (BAND)
Forward P/S Ratio: 0.6x
Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ: BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.
Why Does BAND Fall Short?
- Sales trends were unexciting over the last two years as its 12% annual growth was below the typical software company
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 39.1%, one of the worst among software companies
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
Bandwidth’s stock price of $15.32 implies a valuation ratio of 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why BAND doesn’t pass our bar.
Two Value Stocks to Watch:
Incyte (INCY)
Forward P/E Ratio: 12.9x
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 Positive On INCY?
- Market share has increased this cycle as its 18% annual revenue growth over the last two years was exceptional
- Share repurchases over the last five years enabled its annual earnings per share growth of 75.7% to outpace its revenue gains
- Free cash flow margin increased by 7.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $92.03 per share, Incyte trades at 12.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
NMI Holdings (NMIH)
Forward P/B Ratio: 0.9x
Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ: NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.
Why Does NMIH Stand Out?
- Pre-tax profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Impressive 16.1% annual book value per share growth over the last five years indicates it’s building equity value this cycle
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
NMI Holdings is trading at $37.12 per share, or 0.9x forward P/B. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
