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.
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 is one value stock offering a compelling risk-reward profile and two facing an uphill battle.
Two Value Stocks to Sell:
nCino (NCNO)
Forward P/S Ratio: 2.5x
Born from the internal technology needs of a community bank in 2011, nCino (NASDAQ: NCNO) provides cloud-based software that helps financial institutions streamline client onboarding, loan origination, and account opening processes.
Why Are We Hesitant About NCNO?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 9.5% underwhelmed
- Estimated sales growth of 7.6% for the next 12 months implies demand will slow from its two-year trend
- Gross margin of 61.6% reflects its relatively high servicing costs
nCino is trading at $15.51 per share, or 2.5x forward price-to-sales. To fully understand why you should be careful with NCNO, check out our full research report (it’s free).
ABM (ABM)
Forward P/E Ratio: 10.7x
With roots dating back to 1909 as a window washing company, ABM Industries (NYSE: ABM) provides integrated facility management, infrastructure, and mobility solutions across various sectors including commercial, manufacturing, education, and aviation.
Why Does ABM Worry Us?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Low free cash flow margin of 1.7% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
ABM’s stock price of $43.48 implies a valuation ratio of 10.7x forward P/E. Dive into our free research report to see why there are better opportunities than ABM.
One Value Stock to Watch:
Pinnacle Financial Partners (PNFP)
Forward P/B Ratio: 1x
Founded in 2000 with a focus on delivering big-bank capabilities with community bank personalization, Pinnacle Financial Partners (NASDAQ: PNFP) is a Tennessee-based financial holding company that provides banking, investment, trust, mortgage, and insurance services to businesses and individuals.
Why Are We Positive on PNFP?
- 13.5% annual net interest income growth over the last five years surpassed the sector average as its loans resonated with borrowers
- Projected net interest income growth of 89.6% for the next 12 months is above its five-year trend, pointing to accelerating demand
- Annual tangible book value per share growth of 10% over the past five years was outstanding, reflecting strong capital accumulation this cycle
At $96 per share, Pinnacle Financial Partners trades at 1x forward P/B. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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.
