2 Value Stocks with Solid Fundamentals and 1 We Turn Down

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.

Identifying genuine bargains from value traps is something many investors struggle with, which is why we started StockStory - to help you find the best companies. Keeping that in mind, here are two value stocks with strong fundamentals and one best left ignored.

One Value Stock to Sell:

Alarm.com (ALRM)

Forward P/S Ratio: 2.3x

Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ:ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.

Why Do We Think ALRM Will Underperform?

1. Customers had second thoughts about committing to its platform over the last year as its average billings growth of 8.4% underwhelmed
2. Estimated sales growth of 3.6% for the next 12 months implies demand will slow from its two-year trend
3. Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses

Alarm.com’s stock price of $43.10 implies a valuation ratio of 2.3x forward price-to-sales. To fully understand why you should be careful with ALRM, check out our full research report (it’s free).

Two Value Stocks to Watch:

Altria (MO)

Forward P/E Ratio: 12.1x

Best known for its Marlboro brand of cigarettes, Altria (NYSE:MO) offers tobacco and nicotine products.

Why Could MO Be a Winner?

1. Products command premium prices and lead to a best-in-class gross margin of 87.7%
2. Excellent operating margin of 52.7% highlights the efficiency of its business model, and its rise over the last year shows it refined its expense structure
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Altria is trading at $71.30 per share, or 12.1x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

CBIZ (CBZ)

Forward P/E Ratio: 6.9x

With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.

Why Will CBZ Outperform?

1. Annual revenue growth of 30.3% over the last two years was superb and indicates its market share increased during this cycle
2. Earnings per share have massively outperformed its peers over the last two years, increasing by 22.9% annually
3. Respectable free cash flow margin of 7% minimizes the need for external capital because it can finance growth internally, and its recently improved profitability means it has more resources to invest or distribute

At $30.46 per share, CBIZ trades at 6.9x 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

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 (+1,326% between June 2020 and June 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.