Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune 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. Keeping that in mind, here are three value stocks climbing an uphill battle and some other investments you should look into instead.
Park-Ohio (PKOH)
Forward P/E Ratio: 6.1x
Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.
Why Are We Wary of PKOH?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Gross margin of 15.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash burn makes us question whether it can achieve sustainable long-term growth
Park-Ohio is trading at $20.88 per share, or 6.1x forward P/E. Read our free research report to see why you should think twice about including PKOH in your portfolio.
TD SYNNEX (SNX)
Forward P/E Ratio: 11.8x
Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE:SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.
Why Are We Hesitant About SNX?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Earnings per share fell by 1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Poor free cash flow margin of 1.2% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
TD SYNNEX’s stock price of $148.07 implies a valuation ratio of 11.8x forward P/E. To fully understand why you should be careful with SNX, check out our full research report (it’s free).
TaskUs (TASK)
Forward P/E Ratio: 12.6x
Starting as a virtual assistant service in 2008 before evolving into a global digital services provider, TaskUs (NASDAQ:TASK) provides outsourced digital services including customer experience management, content moderation, and AI data services to innovative technology companies.
Why Do We Think Twice About TASK?
- Muted 1.8% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Earnings per share have dipped by 4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Underwhelming 5.4% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $17.51 per share, TaskUs trades at 12.6x forward P/E. Check out our free in-depth research report to learn more about why TASK doesn’t pass our bar.
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.