Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes 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.

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.

Constellation Brands (STZ)

Forward P/E Ratio: 11.1x

With a presence in more than 100 countries, Constellation Brands (NYSE: STZ) is a globally renowned producer and marketer of beer, wine, and spirits.

Why Does STZ Fall Short?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Projected sales growth of 1.1% for the next 12 months suggests sluggish demand
3. Earnings growth underperformed the sector average over the last three years as its EPS grew by just 3.3% annually

Constellation Brands’s stock price of $130.87 implies a valuation ratio of 11.1x forward P/E. To fully understand why you should be careful with STZ, check out our full research report (it’s free).

Luxfer (LXFR)

Forward P/E Ratio: 13.1x

With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE: LXFR) offers specialized materials, components, and gas containment devices to various industries.

Why Are We Wary of LXFR?

1. Sales tumbled by 2.3% annually over the last two years, showing market trends are working against it during this cycle
2. Anticipated sales growth of 2.7% for the next year implies demand will be shaky
3. Earnings per share have contracted by 2.1% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

Luxfer is trading at $17.17 per share, or 13.1x forward P/E. If you’re considering LXFR for your portfolio, see our FREE research report to learn more.

Baxter (BAX)

Forward P/E Ratio: 12.3x

With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE: BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.

Why Are We Bearish on BAX?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Negative returns on capital show that some of its growth strategies have backfired

At $26.20 per share, Baxter trades at 12.3x forward P/E. Read our free research report to see why you should think twice about including BAX in your portfolio.

Stocks We Like 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 meet 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.