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 is one value stock offering a compelling risk-reward profile and two with little support.
Two Value Stocks to Sell:
El Pollo Loco (LOCO)
Forward P/E Ratio: 10.9x
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
Why Should You Dump LOCO?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Subscale operations are evident in its revenue base of $480.8 million, meaning it has fewer distribution channels than its larger rivals
- Anticipated sales growth of 4% for the next year implies demand will be shaky
At $10.48 per share, El Pollo Loco trades at 10.9x forward P/E. Read our free research report to see why you should think twice about including LOCO in your portfolio.
MasterCraft (MCFT)
Forward P/E Ratio: 13.5x
Started by a waterskiing instructor, MasterCraft (NASDAQ:MCFT) specializes in designing, manufacturing, and selling sport boats.
Why Do We Avoid MCFT?
- Demand for its offerings was relatively low as its number of boats sold has underwhelmed
- Poor free cash flow margin of 11.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
MasterCraft’s stock price of $18.10 implies a valuation ratio of 13.5x forward P/E. Check out our free in-depth research report to learn more about why MCFT doesn’t pass our bar.
One Value Stock to Buy:
EVERTEC (EVTC)
Forward P/E Ratio: 7.9x
Operating one of Latin America's leading PIN debit networks called ATH, EVERTEC (NYSE:EVTC) is a payment transaction processor and financial technology provider that enables merchants and financial institutions across Latin America and the Caribbean to accept and process electronic payments.
Why Is EVTC a Top Pick?
- Annual revenue growth of 16.8% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 12.5% annually over the last five years and slightly topped the peer group average
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
EVERTEC is trading at $29.24 per share, or 7.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
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 Strong Momentum Stocks for this week. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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