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. Keeping that in mind, here is one value stock with strong fundamentals and two climbing an uphill battle.
Two Value Stocks to Sell:
Penguin Solutions (PENG)
Forward P/E Ratio: 9.1x
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Why Do We Avoid PENG?
- Annual sales declines of 2.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 29.1%
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.2% for the last two years
Penguin Solutions’s stock price of $18.90 implies a valuation ratio of 9.1x forward P/E. If you’re considering PENG for your portfolio, see our FREE research report to learn more.
Peoples Bancorp (PEBO)
Forward P/B Ratio: 0.9x
Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ: PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.
Why Are We Hesitant About PEBO?
- Estimated net interest income growth of 2.7% for the next 12 months implies demand will slow from its five-year trend
- Net interest margin dropped by 44.7 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 13.5% annually while its revenue grew
Peoples Bancorp is trading at $29.04 per share, or 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than PEBO.
One Value Stock to Watch:
Pinnacle Financial Partners (PNFP)
Forward P/B Ratio: 1x
Founded in 2000 with a focus on delivering big-bank capabilities with community bank personalization, Pinnacle Financial Partners (NASDAQ: PNFP) is a Tennessee-based financial holding company that provides banking, investment, trust, mortgage, and insurance services to businesses and individuals.
Why Could PNFP Be a Winner?
- Market share has increased this cycle as its 13.6% annual net interest income growth over the last five years was exceptional
- Earnings per share have massively outperformed its peers over the last two years, increasing by 6.6% annually
- Impressive 11.6% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
At $88.89 per share, Pinnacle Financial Partners trades at 1x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
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 Growth Stocks for this month. 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
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