3 Value Stocks That Fall Short

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. That said, here are three value stocks with little support and some other investments you should consider instead.

ArcBest (ARCB)

Forward P/E Ratio: 11.8x

Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ:ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.

Why Do We Think ARCB Will Underperform?

1. Flat unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Sales were less profitable over the last two years as its earnings per share fell by 28.1% annually, worse than its revenue declines
3. Waning returns on capital imply its previous profit engines are losing steam

At $73.16 per share, ArcBest trades at 11.8x forward P/E. To fully understand why you should be careful with ARCB, check out our full research report (it’s free).

Ziff Davis (ZD)

Forward P/E Ratio: 5.4x

Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.

Why Do We Avoid ZD?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle
2. Earnings per share fell by 1.7% annually over the last five years while its revenue was flat, showing each sale was less profitable
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 15.2 percentage points

Ziff Davis is trading at $37.31 per share, or 5.4x forward P/E. Dive into our free research report to see why there are better opportunities than ZD.

State Street (STT)

Forward P/E Ratio: 10.9x

Dating back to 1792 when Boston's Long Wharf was the center of global shipping and trade, State Street (NYSE:STT) provides custody, investment management, and other financial services to institutional investors like pension funds, asset managers, and central banks worldwide.

Why Is STT Risky?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.3% over the last five years was below our standards for the financials sector
2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 5.2% annually
3. Below-average return on equity indicates management struggled to find compelling investment opportunities

State Street’s stock price of $115.24 implies a valuation ratio of 10.9x forward P/E. If you’re considering STT for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

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

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