3 Value Stocks Skating on Thin Ice

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

Yext (YEXT)

Forward P/S Ratio: 1.9x

Founded in 2006 by Howard Lerman, Yext (NYSE:YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.

Why Do We Avoid YEXT?

1. Average ARR growth of 4% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
3. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 6.2 percentage points

At $6.57 per share, Yext trades at 1.9x forward price-to-sales. To fully understand why you should be careful with YEXT, check out our full research report (it’s free).

Sprinklr (CXM)

Forward P/S Ratio: 2.7x

Initially focused only on social media management, Sprinklr (NYSE: CXM) is a leading provider of unified customer experience management software.

Why Should You Sell CXM?

1. Average billings growth of 5.5% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its three-year trend
3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 1.6 percentage points

Sprinklr is trading at $8.84 per share, or 2.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CXM.

SS&C (SSNC)

Forward P/E Ratio: 13.4x

Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ:SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.

Why Are We Wary of SSNC?

1. 4.9% annual revenue growth over the last five years was slower than its business services peers
2. 3 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
3. Underwhelming 6.3% return on capital reflects management’s difficulties in finding profitable growth opportunities

SS&C’s stock price of $80.94 implies a valuation ratio of 13.4x forward P/E. Check out our free in-depth research report to learn more about why SSNC doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free.