Value investing has produced some of the world’s most famous investing billionaires, including Warren Buffett, David Einhorn, and Seth Klarman, who built their fortunes 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.
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 is one value stock with strong fundamentals and two best left ignored.
Two Value Stocks to Sell:
Radian Group (RDN)
Forward P/B Ratio: 0.9x
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE:RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Why Are We Wary of RDN?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Net premiums earned remained stagnant over the last five years, indicating expansion challenges this cycle
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.2% annually
At $33.73 per share, Radian Group trades at 0.9x forward P/B. To fully understand why you should be careful with RDN, check out our full research report (it’s free).
Sixth Street Specialty Lending (TSLX)
Forward P/E Ratio: 10.2x
Originally launched as TPG Specialty Lending before rebranding in 2020, Sixth Street Specialty Lending (NYSE:TSLX) is a business development company that provides customized financing solutions to middle-market companies across various industries.
Why Should You Sell TSLX?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.7% annually over the last two years
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Sixth Street Specialty Lending is trading at $17.47 per share, or 10.2x forward P/E. Read our free research report to see why you should think twice about including TSLX in your portfolio.
One Value Stock to Buy:
EXL (EXLS)
Forward P/E Ratio: 12.9x
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ:EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
Why Will EXLS Outperform?
- Impressive 17.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share repurchases over the last five years enabled its annual earnings per share growth of 21.4% to outpace its revenue gains
- Free cash flow margin grew by 5.2 percentage points over the last five years, giving the company more chips to play with
EXL’s stock price of $30.01 implies a valuation ratio of 12.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.