Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune 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 offering a compelling risk-reward profile and two climbing an uphill battle.

Two Value Stocks to Sell:

American Woodmark (AMWD)

Forward P/E Ratio: 8.6x

Starting as a small millwork shop, American Woodmark (NASDAQ: AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.

Why Are We Out on AMWD?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 9% annually over the last two years
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

At $53.13 per share, American Woodmark trades at 8.6x forward P/E. To fully understand why you should be careful with AMWD, check out our full research report (it’s free).

First Solar (FSLR)

Forward P/E Ratio: 8.3x

Headquartered in Arizona, First Solar (NASDAQ: FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.

Why Are We Hesitant About FSLR?

1. Annual revenue growth of 6.8% over the last five years was below our standards for the industrials sector
2. Free cash flow margin shrank by 18.5 percentage points over the last five years, suggesting the company stepped up its investments to maintain its competitive edge
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

First Solar’s stock price of $166.55 implies a valuation ratio of 8.3x forward P/E. Read our free research report to see why you should think twice about including FSLR in your portfolio.

One Value Stock to Watch:

Yelp (YELP)

Forward EV/EBITDA Ratio: 6.4x

Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE: YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.

Why Does YELP Stand Out?

1. Platform is difficult to replicate at scale and results in a best-in-class gross margin of 91.2%
2. Excellent EBITDA margin of 25.7% highlights the efficiency of its business model, and its profits increased over the last few years as it scaled
3. YELP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute

Yelp is trading at $34.59 per share, or 6.4x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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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