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. Keeping that in mind, here are two value stocks trading at big discounts to their intrinsic values and one with little support.

One Value Stock to Sell:

Sally Beauty (SBH)

Forward P/E Ratio: 6.1x

Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE: SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.

Why Are We Wary of SBH?

1. Failure to add new stores points to soft demand and a focus on boosting sales at current locations
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
3. Modest revenue base of $3.73 billion gives it less fixed cost leverage and fewer distribution channels than larger companies

Sally Beauty’s stock price of $13.09 implies a valuation ratio of 6.1x forward P/E. To fully understand why you should be careful with SBH, check out our full research report (it’s free).

Two Value Stocks to Watch:

WisdomTree (WT)

Forward P/E Ratio: 14.3x

Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.

Why Will WT Outperform?

1. Market share has increased this cycle as its 22.5% annual revenue growth over the last two years was exceptional
2. Share buybacks catapulted its annual earnings per share growth to 52%, which outperformed its revenue gains over the last two years
3. Industry-leading 15.2% return on equity demonstrates management’s skill in finding high-return investments

WisdomTree is trading at $15.50 per share, or 14.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

NMI Holdings (NMIH)

Forward P/B Ratio: 0.9x

Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ: NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.

Why Could NMIH Be a Winner?

1. Pre-tax profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
2. Annual book value per share growth of 16.5% over the past five years was outstanding, reflecting strong capital accumulation this cycle
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

At $37.44 per share, NMI Holdings trades at 0.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.