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 is one value stock offering a compelling risk-reward profile and two with little support.
Two Value Stocks to Sell:
Bumble (BMBL)
Forward EV/EBITDA Ratio: 2.2x
Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ:BMBL) is a leading dating app built with women at the center.
Why Are We Hesitant About BMBL?
- Annual revenue growth of 7.2% over the last three years was below our standards for the consumer internet sector
- Focus on expanding its platform came at the expense of monetization as its average revenue per buyer fell by 4.6% annually
- Forecasted revenue decline of 9.5% for the upcoming 12 months implies demand will fall off a cliff
Bumble’s stock price of $6.07 implies a valuation ratio of 2.2x forward EV/EBITDA. Check out our free in-depth research report to learn more about why BMBL doesn’t pass our bar.
The ONE Group (STKS)
Forward P/E Ratio: 5.9x
Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ:STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill.
Why Is STKS Not Exciting?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings per share have contracted by 19.2% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $2.72 per share, The ONE Group trades at 5.9x forward P/E. Dive into our free research report to see why there are better opportunities than STKS.
One Value Stock to Buy:
Merchants Bancorp (MBIN)
Forward P/B Ratio: 0.8x
With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.
Why Will MBIN Beat the Market?
- Market share has increased this cycle as its 22.9% annual net interest income growth over the last five years was exceptional
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 13.9% annually
- Annual tangible book value per share growth of 21.1% over the past two years was outstanding, reflecting strong capital accumulation this cycle
Merchants Bancorp is trading at $33 per share, or 0.8x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 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-small-cap company Comfort Systems (+782% 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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