Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes 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.
Separating the winners from the value traps is a tough challenge, and that’s where StockStory comes in. Our job is to find you high-quality companies that will stand the test of time. That said, here are three value stocks with little support and some other investments you should consider instead.
Sprout Social (SPT)
Forward P/S Ratio: 0.9x
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ: SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Are We Wary of SPT?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 11.1% underwhelmed
- Estimated sales growth of 10.9% for the next 12 months implies demand will slow from its two-year trend
- Rapid expansion strategy came at the expense of operating margin profitability
Sprout Social’s stock price of $7.28 implies a valuation ratio of 0.9x forward price-to-sales. Check out our free in-depth research report to learn more about why SPT doesn’t pass our bar.
Crane NXT (CXT)
Forward P/E Ratio: 12.4x
Born from a corporate transformation completed in 2023, Crane NXT (NYSE: CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Why Does CXT Fall Short?
- Sales trends were unexciting over the last three years as its 3.3% annual growth was below the typical business services company
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 1.3% annually while its revenue grew
- Free cash flow margin shrank by 7.9 percentage points over the last four years, suggesting the company is consuming more capital to stay competitive
At $52.62 per share, Crane NXT trades at 12.4x forward P/E. To fully understand why you should be careful with CXT, check out our full research report (it’s free).
Ladder Capital (LADR)
Forward P/B Ratio: 0.9x
Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.
Why Is LADR Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.7% annually over the last two years
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Tangible book value per share was flat over the last two years, indicating it’s failed to build equity value this cycle
Ladder Capital is trading at $10.74 per share, or 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than LADR.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
