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.

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 is one value stock trading at a big discount to its intrinsic value and two with little support.

Two Value Stocks to Sell:

NXP Semiconductors (NXPI)

Forward P/E Ratio: 13.9x

Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.

Why Does NXPI Worry Us?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.3% annually over the last two years

2. Forecasted revenue decline of 5.3% for the upcoming 12 months implies demand will fall even further

3. 8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

At $187.58 per share, NXP Semiconductors trades at 13.9x forward price-to-earnings. Read our free research report to see why you should think twice about including NXPI in your portfolio, it’s free .

Hillman (HLMN)

Forward P/E Ratio: 13.8x

Established when Max Hillman purchased a franchise operation, Hillman (NASDAQ:HLMN) designs, manufactures, and sells industrial equipment and systems for various sectors.

Why Are We Cautious About HLMN?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle

2. Subpar operating margin of 3.7% constrains its ability to invest in process improvements or effectively respond to new competitive threats

3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Hillman’s stock price of $7.21 implies a valuation ratio of 13.8x forward price-to-earnings. If you’re considering HLMN for your portfolio, see our FREE research report to learn more .

One Value Stock to Watch:

Amgen (AMGN)

Forward P/E Ratio: 13.3x

Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ:AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.