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.

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. Keeping that in mind, here are three value stocks with little support and some other investments you should consider instead.

Kraft Heinz (KHC)

Forward P/E Ratio: 9.8x

The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ:KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.

Why Is KHC Risky?

1. Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Forecasted revenue decline of 1.6% for the upcoming 12 months implies demand will fall off a cliff
3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 11.2 percentage points

Kraft Heinz’s stock price of $26.44 implies a valuation ratio of 9.8x forward P/E. Dive into our free research report to see why there are better opportunities than KHC.

Steelcase (SCS)

Forward P/E Ratio: 9.7x

Founded in 1912 when metal office furniture was replacing wooden alternatives, Steelcase (NYSE:SCS) is a global office furniture manufacturer that designs and produces workplace solutions including desks, chairs, architectural products, and services.

Why Should You Dump SCS?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3.2% annually over the last five years
2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Steelcase is trading at $10.51 per share, or 9.7x forward P/E. Read our free research report to see why you should think twice about including SCS in your portfolio.

Scorpio Tankers (STNG)

Forward P/E Ratio: 6.5x

Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.

Why Are We Wary of STNG?

1. Number of total vessels has disappointed over the past two years, indicating weak demand for its offerings
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Earnings per share have contracted by 31.6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

At $41.51 per share, Scorpio Tankers trades at 6.5x forward P/E. To fully understand why you should be careful with STNG, check out our full research report (it’s free).

Stocks We Like More

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 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today.