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.
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 are three value stocks with strong fundamentals.
Semrush (SEMR)
Forward P/S Ratio: 2.3x
Born from the need to make sense of the complex digital marketing landscape, Semrush (NYSE: SEMR) is a software-as-a-service platform that helps companies improve their online visibility, analyze digital marketing efforts, and optimize content across search engines and social media.
Why Could SEMR Be a Winner?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 23% over the last year
- Prominent and differentiated software leads to a stellar gross margin of 81.4%
- Free cash flow margin is anticipated to expand by 5.9 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends
Semrush is trading at $7.53 per share, or 2.3x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Dick's (DKS)
Forward P/E Ratio: 15.3x
Started as a hunting supply store, Dick’s Sporting Goods (NYSE: DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.
Why Are We Fans of DKS?
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 4.3% over the past two years
- Exciting sales outlook for the upcoming 12 months calls for 54.9% growth, an acceleration from its six-year trend
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $227.21 per share, Dick's trades at 15.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Cigna (CI)
Forward P/E Ratio: 9.2x
With roots dating back to 1792 and serving millions of customers across the globe, The Cigna Group (NYSE: CI) provides healthcare services through its Evernorth Health Services and Cigna Healthcare segments, offering pharmacy benefits, specialty care, and medical plans.
Why Do We Like CI?
- Market share has increased this cycle as its 18.7% annual revenue growth over the last two years was exceptional
- Unparalleled scale of $262 billion in revenue enables it to spread administrative costs across a larger membership base
- Earnings growth has topped the peer group average over the last five years as its EPS has compounded at 7.7% annually
Cigna’s stock price of $294.50 implies a valuation ratio of 9.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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