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.
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 with strong fundamentals and two with little support.
Two Value Stocks to Sell:
MillerKnoll (MLKN)
Forward P/E Ratio: 7.7x
Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ:MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.
Why Is MLKN Not Exciting?
- Sales trends were unexciting over the last two years as its 1.4% annual growth was below the typical business services company
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 7.9% annually
- Poor free cash flow margin of 2.9% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
MillerKnoll’s stock price of $14.33 implies a valuation ratio of 7.7x forward P/E. Read our free research report to see why you should think twice about including MLKN in your portfolio.
Zebra (ZBRA)
Forward P/E Ratio: 11.3x
Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.
Why Does ZBRA Worry Us?
- Annual revenue growth of 3.9% over the last five years was below our standards for the business services sector
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 4.3% annually
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $199.05 per share, Zebra trades at 11.3x forward P/E. If you’re considering ZBRA for your portfolio, see our FREE research report to learn more.
One Value Stock to Buy:
Matador Resources (MTDR)
Forward P/E Ratio: 11.9x
Operating primarily in the Delaware Basin where multiple oil-bearing layers lie stacked thousands of feet deep, Matador Resources (NYSE:MTDR) explores for, drills, and produces oil and natural gas from underground rock formations in New Mexico and Texas.
Why Will MTDR Outperform?
- Annual revenue growth of 26.4% over the last ten years was superb and indicates its market share increased during this cycle
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 82.5%
- Robust free cash flow margin of 23.8% gives it many options for capital deployment
Matador Resources is trading at $64.89 per share, or 11.9x forward P/E. Is now a good time to buy? Find out 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.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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.