3 Value Stocks in Hot Water

Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor. The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.

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 climbing an uphill battle and some other investments you should look into instead.

Mister Car Wash (MCW)

Forward P/E Ratio: 14.7x

Formerly known as Hotshine Holdings, Mister Car Wash (NYSE:MCW) offers car washes across the United States through its conveyorized service.

Why Is MCW Risky?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Mister Car Wash’s stock price of $6.61 implies a valuation ratio of 14.7x forward P/E. Check out our free in-depth research report to learn more about why MCW doesn’t pass our bar.

Masco (MAS)

Forward P/E Ratio: 14.6x

Headquartered just outside of Detroit, MI, Masco (NYSE:MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.

Why Do We Steer Clear of MAS?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Projected sales for the next 12 months are flat and suggest demand will be subdued
3. Waning returns on capital imply its previous profit engines are losing steam

Masco is trading at $63.36 per share, or 14.6x forward P/E. If you’re considering MAS for your portfolio, see our FREE research report to learn more.

United Airlines (UAL)

Forward P/E Ratio: 7.7x

Founded in 1926, United Airlines Holdings (NASDAQ:UAL) operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.

Why Do We Pass on UAL?

1. Demand for its offerings was relatively low as its number of revenue passenger miles has underwhelmed
2. Projected 6.8 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
3. Underwhelming 5.6% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $81.40 per share, United Airlines trades at 7.7x forward P/E. To fully understand why you should be careful with UAL, check out our full research report (it’s free).

Stocks We Like More

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 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.