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.
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 best left ignored.
Two Value Stocks to Sell:
Valley National Bank (VLY)
Forward P/B Ratio: 0.9x
Tracing its roots back to 1927 during the economic boom before the Great Depression, Valley National Bancorp (NASDAQGS:VLY) operates Valley National Bank, providing commercial, consumer, and wealth management banking services across several states.
Why Do We Avoid VLY?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Muted 10% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Earnings per share fell by 2.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Valley National Bank is trading at $11.91 per share, or 0.9x forward P/B. Check out our free in-depth research report to learn more about why VLY doesn’t pass our bar.
Merchants Bancorp (MBIN)
Forward P/B Ratio: 0.9x
With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.
Why Does MBIN Worry Us?
- Weak unit economics are reflected in its net interest margin of 2.9%, one of the worst among bank companies
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.4% annually while its revenue grew
- Low tier one capital ratio of 8.9% indicates the company may struggle to maintain adequate liquidity during periods of economic stress
Merchants Bancorp’s stock price of $36.22 implies a valuation ratio of 0.9x forward P/B. To fully understand why you should be careful with MBIN, check out our full research report (it’s free for active Edge members).
One Value Stock to Buy:
Abercrombie and Fitch (ANF)
Forward P/E Ratio: 10.9x
Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.
Why Is ANF a Top Pick?
- Comparable store sales rose by 11.9% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Differentiated product assortment results in a best-in-class gross margin of 63.3%
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 189% exceeded its revenue gains over the last three years
At $111.88 per share, Abercrombie and Fitch trades at 10.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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-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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
