Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor. The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.

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 three value stocks with little support and some other investments you should consider instead.

LiveRamp (RAMP)

Forward P/S Ratio: 2.2x

Serving as the digital middleman in an increasingly privacy-conscious world, LiveRamp (NYSE: RAMP) provides technology that helps companies securely share and connect their customer data with trusted partners while maintaining privacy compliance.

Why Does RAMP Give Us Pause?

1. 11.5% annual revenue growth over the last three years was slower than its software peers
2. Average ARR growth of 8.9% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
3. Estimated sales growth of 7.8% for the next 12 months implies demand will slow from its three-year trend

LiveRamp’s stock price of $27.39 implies a valuation ratio of 2.2x forward price-to-sales. Check out our free in-depth research report to learn more about why RAMP doesn’t pass our bar.

Carter's (CRI)

Forward P/E Ratio: 11x

Rumored to sell more than 10 products for every child born in the United States, Carter's (NYSE: CRI) is an American designer and marketer of children's apparel.

Why Do We Think CRI Will Underperform?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $28.92 per share, Carter's trades at 11x forward P/E. Read our free research report to see why you should think twice about including CRI in your portfolio.

CVS Health (CVS)

Forward P/E Ratio: 11.4x

With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE: CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary.

Why Do We Think Twice About CVS?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.8% for the last two years
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 4.8% annually while its revenue grew
3. Free cash flow margin dropped by 2.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

CVS Health is trading at $73 per share, or 11.4x forward P/E. Dive into our free research report to see why there are better opportunities than CVS.

High-Quality Stocks for All Market Conditions

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