3 Value Stocks with Open Questions

The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.

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. That said, here are three value stocks with poor fundamentals and some alternatives you should consider instead.

Teladoc (TDOC)

Forward EV/EBITDA Ratio: 5.5x

Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE:TDOC) is a telemedicine platform that facilitates remote doctor’s visits.

Why Does TDOC Worry Us?

1. 2.9% annual revenue growth over the last three years was slower than its consumer internet peers
2. Preference for prioritizing user growth over monetization has led to 7.9% annual drops in its average revenue per user
3. Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend

Teladoc is trading at $7.59 per share, or 5.5x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than TDOC.

Jack in the Box (JACK)

Forward P/E Ratio: 5.3x

Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.

Why Should You Sell JACK?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 6.5 percentage points
3. High net-debt-to-EBITDA ratio of 11× increases the risk of forced asset sales or dilutive financing if operational performance weakens

Jack in the Box’s stock price of $22.42 implies a valuation ratio of 5.3x forward P/E. Check out our free in-depth research report to learn more about why JACK doesn’t pass our bar.

Albertsons (ACI)

Forward P/E Ratio: 7.3x

With over 20 well-known grocery banners spanning 34 states, Albertsons (NYSE:ACI) operates food and drug retail stores across the US, offering groceries, pharmacy services, and own-brand products under banners like Safeway, Jewel-Osco, and Vons.

Why Is ACI Not Exciting?

1. Lack of new stores puts a ceiling on its growth and reflects a focus on optimizing sales at existing locations
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 27.5% that must be offset through higher volumes
3. Operating margin of 2% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments

At $16.62 per share, Albertsons trades at 7.3x forward P/E. To fully understand why you should be careful with ACI, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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.