3 Value Stocks in Hot Water

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.

This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. Keeping that in mind, here are three value stocks with poor fundamentals and some alternatives you should consider instead.

Norwegian Cruise Line (NCLH)

Forward P/E Ratio: 8.2x

With amenities like a full go-kart race track built into its ships, Norwegian Cruise Line (NYSE:NCLH) is a premier global cruise company.

Why Does NCLH Fall Short?

1. Performance surrounding its passenger cruise days has lagged its peers
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Norwegian Cruise Line’s stock price of $17.45 implies a valuation ratio of 8.2x forward P/E. Dive into our free research report to see why there are better opportunities than NCLH.

Terex (TEX)

Forward P/E Ratio: 9.4x

With humble beginnings as a dump truck company, Terex (NYSE:TEX) today manufactures lifting and material handling equipment designed to move and hoist heavy goods and materials.

Why Are We Hesitant About TEX?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. 6.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Terex is trading at $45.84 per share, or 9.4x forward P/E. Check out our free in-depth research report to learn more about why TEX doesn’t pass our bar.

AdaptHealth (AHCO)

Forward P/E Ratio: 8.2x

With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ:AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.

Why Do We Think Twice About AHCO?

1. Muted 3.9% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $8.94 per share, AdaptHealth trades at 8.2x forward P/E. If you’re considering AHCO for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.