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. That said, here is one value stock trading at a big discount to its intrinsic value and two with little support.

Two Value Stocks to Sell:

Flowers Foods (FLO)

Forward P/E Ratio: 14.7x

With Wonder Bread as its premier brand, Flower Foods (NYSE:FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.

Why Does FLO Fall Short?

1. Shrinking unit sales over the past two years suggest it might have to lower prices to stimulate growth

2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion

3. Earnings per share were flat over the last three years and fell short of the peer group average

At $17.14 per share, Flowers Foods trades at 14.7x forward P/E. To fully understand why you should be careful with FLO, check out our full research report (it’s free).

D.R. Horton (DHI)

Forward P/E Ratio: 9.5x

One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE:DHI) builds a variety of new construction homes across multiple markets.

Why Does DHI Give Us Pause?

1. Backlog has dropped by 19.4% on average over the past two years, suggesting it’s losing orders as competition picks up

2. Earnings per share have dipped by 5.6% annually over the past two years, which is concerning because stock prices follow EPS over the long term

3. Eroding returns on capital suggest its historical profit centers are aging

D.R. Horton is trading at $124.93 per share, or 9.5x forward P/E. If you’re considering DHI for your portfolio, see our FREE research report to learn more.

One Value Stock to Watch:

Altria (MO)

Forward P/E Ratio: 11.2x

Best known for its Marlboro brand of cigarettes, Altria (NYSE:MO) offers tobacco and nicotine products.

Why Are We Positive On MO?

1. Differentiated product offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 70.2%

2. Excellent operating margin of 53.6% highlights the efficiency of its business model

3. Robust free cash flow margin of 42.9% gives it many options for capital deployment

Altria’s stock price of $59.94 implies a valuation ratio of 11.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.