The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.
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. Keeping that in mind, here is one value stock offering a compelling risk-reward profile and two with little support.
Two Value Stocks to Sell:
Teradata (TDC)
Forward P/S Ratio: 1.7x
Pioneering data warehousing technology in the 1980s before "big data" was a common term, Teradata (NYSE: TDC) provides cloud-based data analytics and AI platforms that help large enterprises integrate, analyze, and leverage their data across multiple environments.
Why Do We Pass on TDC?
- Billings have dropped by 4.4% over the last year, suggesting it might have to lower prices to stimulate growth
- Gross margin of 59.4% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency
At $28.06 per share, Teradata trades at 1.7x forward price-to-sales. If you’re considering TDC for your portfolio, see our FREE research report to learn more.
Target (TGT)
Forward P/E Ratio: 13.9x
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE: TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Why Should You Dump TGT?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 28% that must be offset through higher volumes
- Subpar operating margin of 5.2% constrains its ability to invest in process improvements or effectively respond to new competitive threats
Target’s stock price of $109.70 implies a valuation ratio of 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than TGT.
One Value Stock to Watch:
Tenet Healthcare (THC)
Forward P/E Ratio: 11.6x
With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE: THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.
Why Are We Fans of THC?
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 30.1% exceeded its revenue gains over the last five years
- Industry-leading 22% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
- Returns on capital are climbing as management makes more lucrative bets
Tenet Healthcare is trading at $191.50 per share, or 11.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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 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.
