2 Value Stocks to Target This Week and 1 Facing Headwinds

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 two value stocks trading at big discounts to their intrinsic values and one best left ignored.

One Value Stock to Sell:

Churchill Downs (CHDN)

Forward P/E Ratio: 13.2x

Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ:CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.

Why Do We Avoid CHDN?

1. Sales trends were unexciting over the last two years as its 10.1% annual growth was below the typical consumer discretionary company
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 10.8% for the last two years
3. Unchanged returns on capital make it difficult for the company’s valuation multiple to re-rate

Churchill Downs’s stock price of $92.64 implies a valuation ratio of 13.2x forward P/E. If you’re considering CHDN for your portfolio, see our FREE research report to learn more.

Two Value Stocks to Watch:

Lyft (LYFT)

Forward EV/EBITDA Ratio: 7x

Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.

Why Will LYFT Beat the Market?

1. Has the opportunity to boost monetization through new features and premium offerings as its active riders have grown by 12.2% annually over the last two years
2. Additional sales over the last three years increased its profitability as the 64.1% annual growth in its earnings per share outpaced its revenue
3. Free cash flow margin grew by 26.3 percentage points over the last few years, giving the company more chips to play with

Lyft is trading at $13.80 per share, or 7x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.

Capital One (COF)

Forward P/E Ratio: 10.1x

Starting as a credit card company in 1988 before expanding into a full-service bank, Capital One (NYSE:COF) is a financial services company that offers credit cards, auto loans, banking services, and commercial lending to consumers and businesses.

Why Does COF Stand Out?

1. Annual revenue growth of 20.8% over the past two years was outstanding, reflecting market share gains this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 27.6% over the last five years outstripped its revenue performance
3. ROE of 10.4% shows management can invest its resources competently

At $209.75 per share, Capital One trades at 10.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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.