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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.

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. That said, here are three value stocks with poor fundamentals and some alternatives you should consider instead.

BigCommerce (BIGC)

Forward P/S Ratio: 1.1x

Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ:BIGC) provides software for businesses to easily create online stores.

Why Do We Avoid BIGC?

1. ARR growth averaged a weak 4% over the last year, suggesting that competition is pulling some attention away from its software

2. Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its three-year trend

3. Poor expense management has led to operating losses

At $5.10 per share, BigCommerce trades at 1.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BIGC.

Molson Coors (TAP)

Forward P/E Ratio: 8.8x

Sporting an impressive roster of iconic beer brands, Molson Coors (NYSE:TAP) is a global brewing giant with a rich history dating back more than two centuries.

Why Do We Think Twice About TAP?

1. Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy

2. Anticipated sales growth of 1.4% for the next year implies demand will be shaky

3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Molson Coors’s stock price of $56.50 implies a valuation ratio of 8.8x forward P/E. If you’re considering TAP for your portfolio, see our FREE research report to learn more.

Universal Health Services (UHS)

Forward P/E Ratio: 9.9x

With a network spanning 39 states and three countries, Universal Health Services (NYSE:UHS) operates acute care hospitals and behavioral health facilities across the United States, United Kingdom, and Puerto Rico.

Why Are We Wary of UHS?

1. Weak comparable store sales trends over the past two years suggest there may be few opportunities in its core markets to open new facilities

2. Efficiency has decreased over the last five years as its adjusted operating margin fell by 1.2 percentage points

3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.1 percentage points