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 three value stocks with little support and some other investments you should consider instead.
Tenable (TENB)
Forward P/S Ratio: 2x
Starting with the widely-used Nessus vulnerability scanner first released in 1998, Tenable (NASDAQ: TENB) provides exposure management solutions that help organizations identify, assess, and prioritize cybersecurity vulnerabilities across their IT infrastructure and cloud environments.
Why Does TENB Fall Short?
- Average billings growth of 8.7% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 7.1% for the next 12 months implies demand will slow from its two-year trend
- Static operating margin over the last year shows it couldn’t become more efficient
Tenable’s stock price of $18.45 implies a valuation ratio of 2x forward price-to-sales. Check out our free in-depth research report to learn more about why TENB doesn’t pass our bar.
Atkore (ATKR)
Forward P/E Ratio: 12.1x
Protecting the things that power our world, Atkore (NYSE: ATKR) designs and manufactures electrical safety products.
Why Do We Think ATKR Will Underperform?
- Sales tumbled by 9.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Free cash flow margin dropped by 9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $65.86 per share, Atkore trades at 12.1x forward P/E. To fully understand why you should be careful with ATKR, check out our full research report (it’s free).
Toll Brothers (TOL)
Forward P/E Ratio: 12.7x
Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE: TOL) is a luxury homebuilder across the United States.
Why Are We Cautious About TOL?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 9.4% decline in its backlog
- Sales are projected to tank by 6.5% over the next 12 months as demand evaporates
- Earnings per share lagged its peers over the last two years as they only grew by 3.6% annually
Toll Brothers is trading at $153.92 per share, or 12.7x forward P/E. Dive into our free research report to see why there are better opportunities than TOL.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
