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 is one value stock trading at a big discount to its intrinsic value and two with little support.
Two Value Stocks to Sell:
Bath and Body Works (BBWI)
Forward P/E Ratio: 7x
Spun off from L Brands in 2020, Bath & Body Works (NYSE: BBWI) is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.
Why Does BBWI Give Us Pause?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Forecasted revenue decline of 2.9% for the upcoming 12 months implies demand will fall even further
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
Bath and Body Works’s stock price of $18.03 implies a valuation ratio of 7x forward P/E. Read our free research report to see why you should think twice about including BBWI in your portfolio.
Select Medical (SEM)
Forward P/E Ratio: 13x
With a nationwide network spanning 46 states and over 2,700 healthcare facilities, Select Medical (NYSE: SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the United States.
Why Does SEM Worry Us?
- Declining admissions over the past two years suggest it might have to lower prices to accelerate growth
- Sales over the last five years were less profitable as its earnings per share fell by 9.3% annually while its revenue was flat
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $16.38 per share, Select Medical trades at 13x forward P/E. If you’re considering SEM for your portfolio, see our FREE research report to learn more.
One Value Stock to Watch:
Occidental Petroleum (OXY)
Forward P/E Ratio: 13.4x
Backed by Warren Buffett's Berkshire Hathaway as a major shareholder, Occidental Petroleum (NYSE: OXY) explores for, develops, and produces oil, natural gas liquids, and natural gas, primarily in the United States and Middle East.
Why Do We Like OXY?
- Massive revenue base of $22.08 billion makes it a household name that influences purchasing decisions
- Excellent production efficiency results in a top-tier gross margin of 65.2%
- Strong free cash flow margin of 24.4% enables it to reinvest or return capital consistently
Occidental Petroleum is trading at $55.65 per share, or 13.4x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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.
