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.
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 are two value stocks offering compelling risk-reward profiles and one with little support.
One Value Stock to Sell:
Ziff Davis (ZD)
Forward P/E Ratio: 9.9x
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Should You Sell ZD?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 9.2 percentage points
- Earnings per share fell by 7% annually over the last five years while its revenue was flat, showing each sale was less profitable
Ziff Davis’s stock price of $52.04 implies a valuation ratio of 9.9x forward P/E. Check out our free in-depth research report to learn more about why ZD doesn’t pass our bar.
Two Value Stocks to Buy:
Lyft (LYFT)
Forward EV/EBITDA Ratio: 7x
Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.
Why Is LYFT a Top Pick?
- Has the opportunity to boost monetization through new features and premium offerings as its active riders have grown by 12.9% annually over the last two years
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 69.1% outpaced its revenue gains
- Free cash flow margin grew by 24.1 percentage points over the last few years, giving the company more chips to play with
Lyft is trading at $15.07 per share, or 7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Crescent Energy (CRGY)
Forward P/E Ratio: 4.7x
Controlling over 1.4 million net acres across proven U.S. basins, Crescent Energy (NYSE: CRGY) extracts oil and natural gas from underground reservoirs in Texas and the Rocky Mountains.
Why Are We Bullish on CRGY?
- Annual revenue growth of 41.5% over the last five years was superb and indicates its market share increased during this cycle
- Excellent production efficiency results in a premier gross margin of 59%
- Robust free cash flow margin of 14.8% gives it many options for capital deployment
At $10.49 per share, Crescent Energy trades at 4.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
