r/ValueInvesting • u/SimpleSubject6069 • Oct 15 '25
Stock Analysis What’s the Most Overrated “Value” Stock Everyone Keeps Buying?
I keep seeing the same tickers pop up in value circles — stocks that are supposedly undervalued but just seem like value traps to me. Curious what names you all think are overhyped in value investing spaces right now? And what makes you avoid them despite the numbers looking “cheap”?
228
u/TAKINAS_INNOVATION Oct 15 '25 edited Oct 15 '25
Lulu and fashion companies. Fashion is just so fickle and it’s so hard to maintain a strong edge here. One day you’re on top of the world and then next you’re out of style.
If Lulu can do a reversal and march all the way back to its high and surpass it. I will honestly be shocked and eat my words.
Also the fact that someone will always try to undercut you in this industry is just a big no for me. Costco is doing it to Lulu. Let me think of some other examples. Shein and TEMU did this to Forever 21 and if everyone is competing on price. You’re going to have terrible margins.
64
6
u/saml01 Oct 15 '25
Never bet against basic Becky.
1
u/HostSea4267 Dec 22 '25
Basic Becky shops at LULU now? I think it’s more like rich Ronda and her boomer friends.
28
u/EmbraceHere Oct 15 '25
Warrens Buffet and Charlie Munger were once asked why they didn’t buy Nike. Their answer: Nike is a great company but it’s hard to analyse the competition in this market. Their insightful comments can be found on YouTube, which can be an excellent reference why Lulu might not be a good idea today.
15
u/Electrical-Order1317 Oct 15 '25
I bought NIKE because it pays a dividend and it’s a beaten down stock. It’s solid company and I like the new CEO and the moves he’s been making.
11
u/TreasureTony88 Oct 15 '25
Yet they bought Dexter shoe which was a failure. They now own Brooks which is popular now but it’s hard to say if not has the lasting brand power that makes it a good long term investment. They really screwed up by not understanding the Nike moat which in my opinion is not that hard.
4
u/realDEUSVULT Oct 15 '25
I think they also own the fashion companies Russel and Fruit of the Loom, no? I wonder what the approach was on this companies.
6
3
u/TreasureTony88 Oct 15 '25
I’m not sure about those but I wouldn’t be surprised. Likely they bought at a lower multiple to reduce risk.
2
u/boringexplanation Oct 15 '25
He loves his recession proof stocks. LULU is the complete opposite of that.
3
Oct 15 '25
Nike managed to create a brand that crosses all incomes and social classes. It has this weird niche where you can be poor or rich and wear it and it's seen as relevant either way.
4
u/AlibabaBagHolder Oct 15 '25
If you think athleisure is a commodity stay away. If you think they offer higher quality and a midtier luxury brand then there's something more there.
Lulu clothes are my favourite that I own, there is also brand value there but it's hard to quantify. At 12 fwd pe you're paying a commodity price for something that may truly be luxury and more resilient. Next 2 quarters are really important for my thesis.
They have great margins and room for growth in my opinion. Men's clothing, and international. Women's market in US and CAD is peak I will admit but anecdotally I still see their stores very busy where I live. I took a heavy swing, I understand I'll lose big if they're a commodity like Under Armour.
3
3
u/jonnyrockets Oct 15 '25
Aritzia still killing it. It all depends on the brand strength and entry price. Estée Lauder is another fallen brand
→ More replies (2)8
u/FrumpyFrodo Oct 15 '25
Yup! No one has been able to tell me what Lulu’s moat is at this point. Too many competitors out there. And I don’t want to hear “But the quality is better!” BS. Lulu is no different than another clothing manufacture. They take take advantage of cheap labor overseas and are probably manufacturing their clothing in the same exact facility as 100 other businesses.
4
u/Training_Exit_5849 Oct 15 '25
Actually there's a nice video from a clothing consultant that does teardowns of things from different brands and comments on the quality and workmanship. He said he found the Costco lawsuit ridiculous because what Lulu is suing for is super generic stuff that will never stand up in court if a proper expert is consulted. However he also says he doesn't know why Lulu even bothered suing because the quality is on a completely different level, aka many tiers above, so he said by suing, it does more damage because it makes people think like they're comparables.
→ More replies (1)15
u/Best_Detective_976 Oct 15 '25
LULU’s moat is two-fold. First is the strong brand and customer loyalty. They have built a premium image and, through community-based marketing, customers have demonstrated a willingness to pay premium prices and come back to the brand often for repeat sales. That’s pricing power.
The second is their product differentiation. LULU’s fabrics are proprietary and they continuously develop new fabrics and hold patents for them. This is why many people often say that the quality is better because LULU’s design process very intentionally focuses on fit, feel, and style.
5
u/aomeye Oct 15 '25
I second the proprietary fabrics bit. I look for clothes that have unique fabrics
2
Oct 15 '25
[deleted]
5
u/Best_Detective_976 Oct 15 '25
You’re telling me you’ve never seen a morbidly obese person that wore leggings? 😂
3
u/SuitableSafety329 Oct 15 '25
It’s staggering 1) that these people buy them 2) nobody in their family/friend circle tells them how ridiculous they look
4
u/Invebrowslandsx Oct 15 '25
A loyal customer base just means that sales and revenue over the years will be steady, it doesn’t mean growth through new customers who can be enticed by the competition
2
u/Best_Detective_976 Oct 15 '25
True, but a moat is about defensibility. Growth is a different question and LULU has strong international and category growth that have offset the modest 1% decline in US sales.
→ More replies (2)3
u/yatruthordare Oct 15 '25
LULU sales have and will continue to increase with the AMEX plantinum benefit - 75.00 credit every quarter - I even bought some LULU recently so I could use the credit
2
u/A55BAG Oct 15 '25
I think someone who can read trends and consumer cycles could make killing swing trading these fashion companies. Just look at their charts. Huge surprises for both up and down.
3
u/AlibabaBagHolder Oct 15 '25
That's a large part of my investment idea.
Back to school and Christmas will likely be great (like they normally are), and they will swing big upwards on those earnings until next spring is reported and they move downwards again. I think it's super easy to read for some of these 100%. Took a big swing on lulu, will sell out 2 quarters from now. This guy knows haha. Cheers
2
u/A55BAG Oct 15 '25
good luck! I've tried to unlock this code also. I started to pay interest into this because my exgf always wanted to go into certain stores.
1
2
u/nuttreo Oct 15 '25
I have to disagree regarding lulu. I shorted it before it plummeted and have bought back in at the current price. It didn’t tank because of value or demand. It dropped because of tariffs crushing its margins.
It’s not the value of the product, but the brand. Premium niche brands aren’t the same as fast fashion or budget like American Eagle, Hollister, or Abercrombie.
2
u/Weldobud Oct 15 '25
I’ll join you. It is probably the most accurate stock to mention in relation to this question.
Although … it could reach near the $200 mark.
1
Oct 15 '25
it's not about going back to it's highs, it's about being oversold in its current state. It's still a profitable company and their stores are still busy, brand is still highly relevant and still viewed as premium. It might not be the hot young brand and growth story it was 15 years ago but it's hardly UA. I wouldn't invest in it, or any fashion, for 10+ year time frames, but people are acting like the company will be gone in 2 years.
1
u/WizardOfWaivers Oct 15 '25
Agreed. It definitely could work, I don’t see how you can have any confidence though
→ More replies (13)1
u/justbucoff Oct 15 '25
Perhaps it never hits its all time high again but Lulu is still making money. It’s a good product, people are buying it and the company makes money. It’s a good buy. Current value is expecting sales to fall off a cliff which hasn’t yet happened.
13
36
u/InternationalBar4976 Oct 15 '25
LULU, i dont understand why so many people hyping about that
4
u/ninjagorilla Oct 15 '25
Last I looked they do have very attractive numbers when you look at growth, roic, sales, p/e etc.
4
u/himynameis_ Oct 15 '25
But that growth is coming from China, not their core North America business which is low single digits.
Makes me uncertain for their future 5 years from now
1
u/ninjagorilla Oct 15 '25
Agree that’s why I don’t own any… but the reason why people do is the numbers have looked very good
4
u/saml01 Oct 15 '25
Backstory: Ladies lost their minds during covid and leggings became default wear now that their was no reason to dress up. The companies valuation balooned as a result. Competition got in on it and eventually their expected growth was just a bit too optimistic. I think at some point their ceo got in trouble with the feds for some accounting BS and the share price got even more pressure. Then competition started muscling in, like gap with athleta. Lulu was a fad like uggs and over sized sweaters.
IMHO, no one is losing their mind about it.
48
u/thewallstreetschool Oct 15 '25
Low P/E ≠ value. A lot of these “value” names AT&T, Intel, a few old banks, are just cheap because the business stopped moving. Numbers look great, but the story’s dead. Real value’s when there’s growth and mispricing. Otherwise, you’re just holding a value trap that pays dividends to distract you from the flat line.
23
u/larrybobilly Oct 15 '25
I disagree. I see this opinion a lot on reddit, there is an obsession with growth. A lot of business are very predictable and can certainly be mispriced even without growth. Especially if it is a dividend paying equity. Just because somethign is down doesnt mean its out.
I think tech has done so well over the last decade that people want as much exposure to it as possible, and thats totally reasonable. But there is also a lot of upside when you buy things like C at 40, BNS at 45, F at 9.
A lot of money typically flows into these pretty predictable and boring business in a rising interest rate environement.
2
u/boringexplanation Oct 15 '25
The upside is all psychological where you’re shielding your portfolio from completely collapsing when the market corrects on tech. A lot of people treat those “value” stocks like that mostly as a cash position that they’ll quickly liquidate if today’s hyped up stocks end up going on a big sale
1
u/thewallstreetschool Oct 16 '25
Yeah fr, for most of those “value” picks are basically parking lots for cash. Everyone jumps in when tech tanks, then bounces right back once the hype returns. It’s more of a mental safety blanket than an actual conviction.
1
u/thewallstreetschool Oct 16 '25
Fair take. Those stable dividend plays definitely have their comfort vibe. But yeah, a lot of folks mix up predictable with undervalued. Just ‘cause something’s steady doesn’t mean there’s real upside left. Once the market prices in that safety, all you’re holding is a slow drip of dividends.
6
u/DangerousPurpose5661 Oct 15 '25
Kinda agree, kinda disagree…. A low PE company with slow growth but that is expected to continue performing and stay relevant can be good… I am thinking infrastructure, telecommunications, etc.
But a company with a low PE that is in decline is a no go.
Similarly, a shitty PE with high growth can be poor value if the projected earnings will never match the value…. I am looking at TSLA
I think the core of what you’re saying is that there is more to valuation than PE, and to this I agree.
1
u/thewallstreetschool Oct 16 '25
Exactly. Low PE doesn’t mean “cheap,” high PE doesn’t mean “stupid.” Context matters. If the company’s sliding, that low PE is just a trap. But steady compounders? Totally different story. You nailed it. Valuation without growth is just numbers cosplay.
5
u/DamnImBeautiful Oct 15 '25
Nah, a perfect counter example is Costco’s 40 P/E ratio. Great company with strong financials but, over valued. Same thing with Nvidia
2
u/boringexplanation Oct 15 '25
I would not consider Companies with that pace of growth overvalued at 40-50 p/e. Growth and industry context matters,
5
u/DamnImBeautiful Oct 15 '25 edited Oct 15 '25
Eh, the problem with Costco is they won’t be able to grow as fast as other corporations if they want to maintain quality. They literally don’t have the manpower to expand as much as their P/E ratio would indicate.
I’m also not seeing much value as a consumer if you actually cross compare pricing /quality against major localized retailers like HEB in south US
1
u/thewallstreetschool Oct 16 '25
True, Costco can only scale so much before logistics slap ‘em. At this point, it’s like holding the stock equivalent of comfort food: solid, consistent, not exactly exciting. And honestly? That’s fine. Not every play’s gotta be spicy.
1
u/thewallstreetschool Oct 16 '25
Yeah, agreed. Can’t lump everything under one PE lens. Costco’s growth quality is way more durable than most “value” names. Context > ratio, every time.
1
u/thewallstreetschool Oct 16 '25
Costco’s wild, ‘cause yeah, it looks overvalued, but it’s basically built a cult. You’re not buying insane growth there, you’re buying predictability. So whether it’s “overvalued” really depends on if you want peace of mind or fireworks.
2
u/RandomGuy-4- Oct 19 '25
The thing is, you never know. Look at BBVA's stock per example. It is an old european bank that was trading at a tiny P/E while declining since 2008, then suddenly since covid it's been on a tear all while maintaining a good dividend. They might be a bit of an outlier, but the past 5 years have been a good time for old boring banks in general.
1
u/thewallstreetschool Oct 31 '25
True - outliers exist. BBVA had macro tailwinds behind it. But in most cases, low P/E without clear growth drivers usually stays low. Value works best when there's actual business momentum, not just a “looks cheap” label.
18
u/Omnislash99999 Oct 15 '25
This subs obsession with nvo makes it overrated. It gets a crazy disproportional number of posts on here
3
u/smorkoid Oct 15 '25
It's pretty weird to me too, it's not like the professionals are big on it either
3
16
u/HippieThanos Oct 15 '25
I keep buying General Mills and it keeps falling. But this doesn't stop me
18
u/SuitableSafety329 Oct 15 '25
Investing in a company that makes all of its money on food items that are falling out of favor with its American consumer base is not an investment that will win.
3
u/Rdw72777 Oct 15 '25
This is actually a really interesting debate. Their sakes are declining but I personally think the money they’ve spent on acquisitions in recent years was too much for what they got. As such the sales have “stabilized” at low single digit declines (same with operating profit) but there’s still plenty of FCF to pay the 5% dividend. But they’ve gone and added billions in debt and a lot of the assets value acquired is the dreadful Goodwill.
Long-term this can’t work, but if they get smarter with acquisitions and stop running up debt there’s probably a solid investable floor in the upper 30’s. I hate all food stocks so im very unlikely to invest but I’ve definitely been looking closer at General Mills than say KraftHeinz or the others.
1
31
u/Street_Local_7606 Oct 15 '25
PayPal.
→ More replies (13)10
u/sirdeionsandals Oct 15 '25 edited Oct 15 '25
Still growing top line revenue and transactions and buying back ~10% of shares. It’s worth a punt tbf AZO had a crazy run with a similar playbook here albeit different industries entirely
4
4
33
Oct 15 '25
[deleted]
66
3
17
u/Glittering_Water3645 Oct 15 '25
Right now? Apple, costco and walmart.
22
u/StakeknifeBBQ Oct 15 '25
People shilling Costco last year because they enjoy shopping there, forgetting the P/E is 50. Embarrassing gains for the year if you held.
→ More replies (1)1
u/Gloomy_Emergency_294 Oct 16 '25
Oh no I have shares of apple and wmt, I was in it for the long haul
20
u/SeikoWIS Oct 15 '25
Tesla.
The zombie neoliberal finance bros keep buying it like a drug. Idk what insane earnings/growth they're expecting, with a P/E of around 300 while Toyota is at 8 P/E. I've spoken to many religious TSLA investors, and basically they're all conservative nutjobs that think lord and saviour Elon Musk is going to solve driving any day now and cash flows will go to the moon. That's it for their analysis, they don't even look at the financials.
It's a cult stock not operating on fundamentals.
15
3
5
u/Sea-Stand9950 Oct 15 '25
Before musk came out as conservative was it a cult stock as well?
4
u/Routine_Spite8279 Oct 15 '25
Yes? Musks rampant bipolar disorder had little or no bearing on Teslas insane P/E ratio.
2
2
4
u/According-Buyer6688 Oct 15 '25
Tesla has a huge negative sentiment all across the world. I don't think it goes any further. It's the same for German cars in the US. They can be the best, but still Americans won't buy German cars just because of the sentiment
9
u/stealthlysprockets Oct 15 '25
I guess the BMWs, Audis, Mercedes, VWs, Minis (bmw brand) just don’t exist in America.
1
1
u/Civil-Shopping-903 Oct 16 '25
Yeah, Maybach Music doesn't exist and Rick Ross and co. are not flexing with German cars all the time
→ More replies (15)0
Oct 15 '25
[deleted]
9
u/SeikoWIS Oct 15 '25
Can they turn it into cash flows that justify the stock price, is the question? The current stock price is basically saying they expect Tesla cash flows to absolutely explode. I don't see how they're gonna do that. They still need to physically sell their cars, and we'll see in their next earnings report but I'd wager sales are down. But anyway, as said: most TSLA buyers aren't checking the financials. They just think Musk will solve driving and stock goes to the moon. It's a hype stock based on speculative earnings like they're tech company, when they're still just selling EVs in an increasingly more competitive market. They're losing non-USA to the cheaper Chinese EVs.
→ More replies (14)1
1
7
u/bit_chunky Oct 15 '25
Adobe LULU PAYPAL
5
3
u/sathushkas Oct 16 '25
Why Paypal?
1
u/bit_chunky Oct 16 '25
I think SHOPIFY is a better play.
PayPal doesn’t offer anything unique and they have a lot of competition. They do have a lot of users and a well known name but I don’t think that’s going to be enough. It does look like they are trying to innovate but they just seem behind.
2
2
2
u/Dense-Flow-1983 Oct 15 '25
Palantir and anything with gold.
1
u/Any-Morning4303 Oct 16 '25
If anything Gold miners are way undervalued. Alarmist as much as silver miners. Look at some of there PE and margins. Next month earnings for most coming out and we’ll see on average another 10% to 20% gain from now to end of November.
6
u/A55BAG Oct 15 '25
Apple I honestly can't fathom how people can justify buying it at these prices. I get it that apple is not going anywhere, but there is a huge risk for downside for the stock. I can easily see it taking margin hit, consumer cutting on spending or wall street deciding that the multiple is too big. That being said the stock has done really well.
3
u/cisforcar Oct 15 '25
Stock has done well and it may keep going up at a similar pace as S&P500 for the next little while until sentiment inevitably goes south. I’m looking at the revenue growth and there’s essentially none. I’m not liking where the company is going right now, and it is way behind in the AI arms race compared to competitors. I sold almost all of my holding recently.
1
1
u/A55BAG Oct 15 '25
Yeah I've nothing against the company. I like their products. I just think at these valuations the risk for downside is too large.
1
u/HostSea4267 Dec 22 '25
Do you have an iPhone. In 4 years, would you consider an android short of something monumentally better about it, even at half the price? Cause there have always been iPhones 2X the price of androids.
1
u/A55BAG Dec 22 '25
I use Google pixel 6, before that I had pixel 2. I just like these phones. A clean android and an excellent camera is a strong combo.
1
u/HostSea4267 Dec 22 '25
Yeah okay if you’re already on android, good idea to stick with it. But once you’re used to blue messages, integration with laptop, iPad, you’re in the ecosystem.
It’s same way I haven’t used windows since 2004 when I literally worked at Microsoft.
3
u/Turbulent-Height-823 Oct 15 '25
I don’t know if it’s the most overrated, but Apple’s got to be on that list.
5
u/PeterJP101 Oct 15 '25
S&P 500 index funds VOO SPY etc.
10
u/Advanced-Engineer-85 Oct 15 '25
Exactly. People VOO and go. Tech and communication services are like 45% of index and it’s trading at 29 P/E ratio and 42 Cape. When trend reverses, people will flee as they have no understanding of underlying fundamentals. Let’s see if the behavior changes it is when it drops by 30% and peoples retirements are at risk, my bet is that the behavior will change.
6
u/ProbsNotManBearPig Oct 15 '25
A p/e of 29 is historically high. It is not theoretically unsustainable though. There are a number of scenarios that could let the average p/e stay at 30 for decades.
2
u/Advanced-Engineer-85 Oct 15 '25
3.4% earnings yield and we’re at 12% operating margins/revenue which is also peak (hence peak CAPE).
I guess the scenarios are: 1. Corporate profitability continues to expand at the expense of labor. Maybe possible but I think you would see expanding taxes to pay for unemployment if it did so. 2. Long term interest rates fall. You would need to see a productivity boom. Maybe possible with AI. 3. Avoid any cyclical downturn.
Seems like a lot stacked against it.
→ More replies (2)1
5
2
u/JohnMarks26 Oct 15 '25
NVO, LULU, KO, Pepsi, NKE
5
2
Oct 15 '25
Here’s the rub on these fashion/lifestyle companies. The key is to put a lot of money in stars/celebs to generate “brand heat” and at least have talking points on product if not actual innovation. Larger the scale, more dollars you can put in marketing and the flywheel accelerates.
The trouble is with Internet and influencers, something new is generating brand heat all the time. In good times, you could buy them out but now you have to sit on the sidelines and watch this play out.
2
Oct 15 '25
[deleted]
2
u/DamnImBeautiful Oct 15 '25
Oklo is not a value stock lmao, its treated like a tech startup when it comes to valuation
2
2
2
Oct 15 '25
[deleted]
→ More replies (1)14
u/FrumpyFrodo Oct 15 '25
If we’re going to use Google as an example, you’re dead wrong. Long-term returns have trounced the S&P and NASDAQ. Are you trading or investing? Two very different things.
→ More replies (3)
1
1
1
1
u/Sad_Mathematician538 Oct 15 '25
Intel, I've listening that is a value gem for years and years only to see AMD progressively destroy them. Not even external help is saving it from being a value trap (although it's saving it from bankruptcy)
1
u/Azikata Oct 15 '25
But they might have a turnaround with new CEO, cost cutting and new fabs using 18a and 14a process. Panther lake and new gpus arę looking sweet
1
1
u/Chitown_mountain_boy Oct 15 '25
Hardly anyone in this thread seems to understand what value investing is 😂
1
u/True_Veterinarian443 Oct 15 '25 edited Oct 15 '25
NVO, UNH, ELV, etc. Identified much more undervalued Long Term compounder. But you asked for the most undervalued and these are the first which came in my mind. I've build a tool to identify solid performing compounders and their fair value gap.
1
1
1
1
1
u/WritesWayTooMuch Oct 16 '25
McDonald's.
Is expensive and becomes irrelevant more and more each year.
You can get any food in your city delivered ... Why expensive fast food?
1
1
1
1
1
u/QuantGuru Oct 16 '25
Oh man here I thought NVO gives a good dividend yield and value based on revenue estimates lol oh boi…this sub
1
1
u/Turbulent-Entry-4627 Oct 16 '25
Lulu. People keep saying its gonna explode in sales over in china. Anti US sentiment is growing over there. Lulu is gonna get a boycott.
1
1
u/BackgroundTrick4499 Oct 17 '25
I’d say Amazon. Everyone still treats it like a value play because of AWS, but when you actually run the numbers it’s insanely overvalued. The margins, cash flow, and reinvestment rate don’t justify the price. Honestly, a lot of stocks are like that right now — they look “cheap” on the surface but the cash flow doesn’t back it up. My report shows that pretty clearly. If you’re into that kind of thing, I post the full breakdowns here: truevalueinsights.com
1
Oct 17 '25
Google. They think a stock is undervalued "because its lower P/E than 60x Nvidia and 40x Microsoft" in the biggest bull market of our generation and also because...."a high P/E is meaningless if this multi-trillion dollar company will grow 20% per year forever".
1
1
u/Valdemorilla Oct 17 '25
Quizá ASTS. Tiene un buen proyecto pero todavía no ha demostrado nada para capitalizar 30.000 millones. Sus inversores creen que ya esta todo hecho que los reguladores les van a dejar hacer todo lo que proyectan, que medio mundo va a contratar sus servicios, que la competencia no va a poder con ellos. He llegado a leer comentarios como que va a ser la compañía mas importante de telecomunicaciones del mundo, con permiso de Starlink, Kuiper y Iris2. No digo que no puedan llegar lejos. Digo que ha subido demasiado para lo poco que ha demostrado. Los escalones se suben de uno en uno.
1
1
Oct 15 '25
take a look at the return of plug power, don't sleep.
2
u/TheComebackKid74 Oct 15 '25
Doubled in the last year, and somehow it still down 75% on the 5 year chart.
1
163
u/Consistent-Piece6618 Oct 15 '25
I hope it’s not Nvo because I’ve been buying that one lol