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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.
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 with little support and some other investments you should consider instead.
Jamf (JAMF)
Forward P/S Ratio: 2.1x
Founded in 2002 by Zach Halmstad and Chip Pearson, right around the time when Apple began to dominate the personal computing market, Jamf (NASDAQ:JAMF) provides software for companies to manage Apple devices such as Macs, iPads, and iPhones.
Why Do We Think Twice About JAMF?
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Annual revenue growth of 17.7% over the last three years was below our standards for the software sector
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Offerings struggled to generate meaningful interest as its average billings growth of 8.9% over the last year did not impress
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Poor expense management has led to operating losses
At $11.02 per share, Jamf trades at 2.1x forward price-to-sales. Read our free research report to see why you should think twice about including JAMF in your portfolio, it’s free.
Foot Locker (FL)
Forward P/E Ratio: 13.8x
Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE:FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.
Why Are We Out on FL?
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Recent store closures and weak same-store sales point to soft demand and an operational restructuring
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Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
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6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Foot Locker’s stock price of $23.82 implies a valuation ratio of 13.8x forward P/E. Check out our free in-depth research report to learn more about why FL doesn’t pass our bar.
BD (BDX)
Forward P/E Ratio: 11.5x
With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE:BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide.
Why Is BDX Not Exciting?
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Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.1% over the last five years was below our standards for the healthcare sector
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Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.5 percentage points
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Underwhelming 4.3% return on capital reflects management’s difficulties in finding profitable growth opportunities