Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune 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. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
Array (ARRY)
Forward P/E Ratio: 12.8x
Going public in October 2020, Array (NASDAQ: ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.
Why Do We Think ARRY Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.8% annually over the last two years
- Earnings per share have dipped by 9.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $9.03 per share, Array trades at 12.8x forward P/E. If you’re considering ARRY for your portfolio, see our FREE research report to learn more.
Hamilton Insurance Group (HG)
Forward P/B Ratio: 1x
Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group (NYSE: HG) operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.
Why Are We Hesitant About HG?
- Sales are projected to tank by 1.9% over the next 12 months as demand evaporates
- Costs have risen faster than its revenue over the last two years, causing its combined ratio to worsen by 5.9 percentage points
- Falling earnings per share over the last one years has some investors worried as stock prices ultimately follow EPS over the long term
Hamilton Insurance Group is trading at $26.51 per share, or 1x forward P/B. Check out our free in-depth research report to learn more about why HG doesn’t pass our bar.
Franklin BSP Realty Trust (FBRT)
Forward P/B Ratio: 0.7x
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Why Are We Out on FBRT?
- Muted 9.4% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 39.7% annually
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 6.8% annually over the last five years
Franklin BSP Realty Trust’s stock price of $9.76 implies a valuation ratio of 0.7x forward P/B. To fully understand why you should be careful with FBRT, check out our full research report (it’s free for active Edge members).
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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
