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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. That said, here are three value stocks with little support and some other investments you should consider instead.

Five9 (FIVN)

Forward P/S Ratio: 1.9x

Started in 2001, Five9 (NASDAQ: FIVN) offers software-as-a-service that makes it easier for companies to set up and efficiently run call centers to offer more tailored customer support.

Why Do We Think Twice About FIVN?

1. Revenue increased by 18% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds

2. Estimated sales growth of 8.4% for the next 12 months implies demand will slow from its three-year trend

3. Gross margin of 54.7% reflects its high servicing costs

Five9 is trading at $24.85 per share, or 1.9x forward price-to-sales. Read our free research report to see why you should think twice about including FIVN in your portfolio, it’s free.

Pangaea (PANL)

Forward P/E Ratio: 4x

Established in 1996, Pangaea Logistics (NASDAQ:PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.

Why Do We Pass on PANL?

1. Sales tumbled by 12.4% annually over the last two years, showing market trends are working against its favor during this cycle

2. Performance over the past two years was negatively impacted by new share issuances as its earnings per share dropped by 40.2% annually, worse than its revenue

3. Free cash flow margin shrank by 5.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Pangaea’s stock price of $4.20 implies a valuation ratio of 4x forward P/E. Dive into our free research report to see why there are better opportunities than PANL.

Hub Group (HUBG)

Forward P/E Ratio: 14.2x

Started with $10,000, Hub Group (NASDAQ:HUBG) is a provider of intermodal, truck brokerage, and logistics services, facilitating transportation solutions for businesses worldwide.

Why Do We Steer Clear of HUBG?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth

2. High input costs result in an inferior gross margin of 12.9% that must be offset through higher volumes

3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term