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.
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. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
BILL (BILL)
Forward P/S Ratio: 2.7x
Transforming the messy back-office financial operations that plague small business owners, BILL (NYSE: BILL) provides a cloud-based platform that automates accounts payable, accounts receivable, and expense management for small and midsize businesses.
Why Is BILL Risky?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 11.7% underwhelmed
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency
BILL’s stock price of $46.65 implies a valuation ratio of 2.7x forward price-to-sales. Read our free research report to see why you should think twice about including BILL in your portfolio.
Movado (MOV)
Forward P/E Ratio: 14.9x
With its watches displayed in 20 museums around the world, Movado (NYSE: MOV) is a watchmaking company with a portfolio of watch brands and accessories.
Why Do We Steer Clear of MOV?
- Annual revenue growth of 4.7% over the last five years was below our standards for the consumer discretionary sector
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Movado is trading at $24.04 per share, or 14.9x forward P/E. Dive into our free research report to see why there are better opportunities than MOV.
Capital Southwest (CSWC)
Forward P/E Ratio: 10.3x
Originally founded in 1961 as a venture capital investor that helped launch Texas Instruments, Capital Southwest (NASDAQ: CSWC) is a business development company that provides debt and equity financing to middle-market companies primarily in the United States.
Why Does CSWC Fall Short?
- Earnings per share fell by 6.7% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
At $23.11 per share, Capital Southwest trades at 10.3x forward P/E. Check out our free in-depth research report to learn more about why CSWC doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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.
