The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.
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 is one value stock with strong fundamentals and two with little support.
Two Value Stocks to Sell:
PubMatic (PUBM)
Forward P/S Ratio: 1.5x
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Should You Sell PUBM?
- Struggled to drive increased usage of its software, demonstrated by its subpar 107% net revenue retention rate
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Projected 8.4 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
At $8.99 per share, PubMatic trades at 1.5x forward price-to-sales. Check out our free in-depth research report to learn more about why PUBM doesn’t pass our bar.
GoodRx (GDRX)
Forward P/E Ratio: 7x
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ: GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
Why Do We Pass on GDRX?
- Underwhelming customer growth over the past two years shows the company faced challenges in winning new contracts
- Smaller revenue base of $800.7 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Negative returns on capital show that some of its growth strategies have backfired
GoodRx’s stock price of $2.77 implies a valuation ratio of 7x forward P/E. To fully understand why you should be careful with GDRX, check out our full research report (it’s free for active Edge members).
One Value Stock to Watch:
Urban Outfitters (URBN)
Forward P/E Ratio: 14x
Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ: URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.
Why Do We Like URBN?
- Same-store sales growth averaged 4.6% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Projected revenue growth of 8.3% over the next 12 months is higher than most peers
- Performance over the past three years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
Urban Outfitters is trading at $76.90 per share, or 14x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
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 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-micro-cap company Tecnoglass (+1,754% 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.
