The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.

This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. That said, here is one value stock with strong fundamentals and two climbing an uphill battle.

Two Value Stocks to Sell:

Zeta (ZETA)

Forward P/S Ratio: 2.4x

Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE:ZETA) provides software and data analytics tools that help companies market their products to billions of customers.

Why Does ZETA Give Us Pause?

1. Customers have churned over the last year due to the commoditized nature of its software, as reflected in its 97% net revenue retention rate

2. Gross margin of 60.3% reflects its relatively high servicing costs

3. Historical operating losses show it had an inefficient cost structure while scaling

Zeta’s stock price of $11.70 implies a valuation ratio of 2.4x forward price-to-sales. If you’re considering ZETA for your portfolio, see our FREE research report to learn more .

Bath and Body Works (BBWI)

Forward P/E Ratio: 7.6x

Spun off from L Brands in 2020, Bath & Body Works (NYSE:BBWI) is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.

Why Does BBWI Worry Us?

1. Muted 6.2% annual revenue growth over the last five years shows its demand lagged behind its consumer retail peers

2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations

3. Estimated sales growth of 2.3% for the next 12 months implies demand will slow from its five-year trend

At $27.57 per share, Bath and Body Works trades at 7.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than BBWI .

One Value Stock to Watch:

Upwork (UPWK)

Forward EV/EBITDA Ratio: 9.7x

Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ:UPWK) is an online platform where businesses and independent professionals connect to get work done.

Why Does UPWK Stand Out?

1. Monetization efforts are paying off as its average revenue per customer has grown by 8.4% annually over the last two years

2. Additional sales over the last three years increased its profitability as the 168% annual growth in its earnings per share outpaced its revenue

3. Free cash flow margin increased by 21.1 percentage points over the last few years, giving the company more capital to invest or return to shareholders