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.
This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. That said, here are two value stocks with strong fundamentals and one with little support.
One Value Stock to Sell:
SAIC (SAIC)
Forward P/E Ratio: 10.7x
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ:SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Is SAIC Risky?
- Sales tumbled by 1.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Forecasted revenue decline of 2.3% for the upcoming 12 months implies demand will fall even further
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.5 percentage points
At $91.70 per share, SAIC trades at 10.7x forward P/E. Check out our free in-depth research report to learn more about why SAIC doesn’t pass our bar.
Two Value Stocks to Watch:
Molina Healthcare (MOH)
Forward P/E Ratio: 12.1x
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE:MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Why Are We Fans of MOH?
- Market share has increased this cycle as its 19.3% annual revenue growth over the last five years was exceptional
- Scale advantages are evident in its $44.55 billion revenue base, which provides operating leverage when demand is strong
- Earnings per share have grown at a respectable 5.8% annual rate over the last five years, a bit better than the industry average
Molina Healthcare’s stock price of $152.24 implies a valuation ratio of 12.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Webster Financial (WBS)
Forward P/B Ratio: 1x
Founded during the Great Depression in 1935 and evolving into a major Northeastern financial institution, Webster Financial (NYSE:WBS) is a bank holding company that provides commercial banking, consumer banking, and employee benefits solutions through its Webster Bank and HSA Bank division.
Why Could WBS Be a Winner?
- Annual net interest income growth of 22.6% over the last five years was superb and indicates its market share increased during this cycle
- Non-interest operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Earnings per share have massively outperformed its peers over the last five years, increasing by 16.8% annually
Webster Financial is trading at $57.56 per share, or 1x forward P/B. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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-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
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