
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.
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. Keeping that in mind, here are two value stocks offering compelling risk-reward profiles and one facing an uphill battle.
One Value Stock to Sell:
ADT (ADT)
Forward P/E Ratio: 6.6x
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE: ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Should You Sell ADT?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Free cash flow margin is forecasted to shrink by 4.6 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
ADT is trading at $6.34 per share, or 6.6x forward P/E. Dive into our free research report to see why there are better opportunities than ADT.
Two Value Stocks to Watch:
Coursera (COUR)
Forward EV/EBITDA Ratio: 0.9x
Founded by two Stanford University computer science professors, Coursera (NYSE: COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.
Why Does COUR Stand Out?
- 15.1% annual revenue growth over the last three years surpassed the sector average as its platform resonated with consumers
- Projected revenue growth of 68% for the next 12 months is above its three-year trend, pointing to accelerating demand
- Additional sales over the last three years increased its profitability as the 68% annual growth in its earnings per share outpaced its revenue
At $5.09 per share, Coursera trades at 0.9x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.
EXL (EXLS)
Forward P/E Ratio: 15.3x
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ: EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
Why Do We Love EXLS?
- Impressive 16.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Expected revenue growth of 14.3% for the next year suggests its market share will rise
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
EXL’s stock price of $37.55 implies a valuation ratio of 15.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
