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. Keeping that in mind, here is one value stock trading at a big discount to its intrinsic value and two with little support.
Two Value Stocks to Sell:
Health Catalyst (HCAT)
Forward P/S Ratio: 0.4x
Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ: HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.
Why Should You Sell HCAT?
- Customers had second thoughts about committing to its platform over the last year as its billings plateaued
- Sky-high servicing costs result in an inferior gross margin of 50.4% that must be offset through increased usage
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
Health Catalyst’s stock price of $1.29 implies a valuation ratio of 0.4x forward price-to-sales. If you’re considering HCAT for your portfolio, see our FREE research report to learn more.
Hormel Foods (HRL)
Forward P/E Ratio: 13.7x
Best known for its SPAM brand, Hormel (NYSE: HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Why Do We Steer Clear of HRL?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 16.2% that must be offset through higher volumes
- Sales over the last three years were less profitable as its earnings per share fell by 8.8% annually while its revenue was flat
Hormel Foods is trading at $20.74 per share, or 13.7x forward P/E. Read our free research report to see why you should think twice about including HRL in your portfolio.
One Value Stock to Watch:
Maximus (MMS)
Forward P/E Ratio: 6.6x
With nearly 50 years of experience translating public policy into operational programs that serve millions of citizens, Maximus (NYSE: MMS) provides operational services, clinical assessments, and technology solutions to government agencies in the U.S. and internationally.
Why Could MMS Be a Winner?
- Adjusted operating margin improvement of 2.6 percentage points over the last five years demonstrates its ability to scale efficiently
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 21.2% exceeded its revenue gains over the last two years
- Rising returns on capital show management is finding more attractive investment opportunities
At $60.10 per share, Maximus trades at 6.6x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
