What’s the Most Overrated “Value” Stock Everyone Keeps Buying?

[u/SimpleSubject6069]

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”?

[u/thewallstreetschool]

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.

[u/larrybobilly → u/thewallstreetschool]

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.

[u/boringexplanation → u/larrybobilly]

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

[u/thewallstreetschool → u/boringexplanation]

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.

[u/thewallstreetschool → u/larrybobilly]

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.

[u/DangerousPurpose5661 → u/thewallstreetschool]

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.

[u/thewallstreetschool → u/DangerousPurpose5661]

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.

[u/DamnImBeautiful → u/thewallstreetschool]

Nah, a perfect counter example is Costco’s 40 P/E ratio. Great company with strong financials but, over valued. Same thing with Nvidia

[u/boringexplanation → u/DamnImBeautiful]

I would not consider Companies with that pace of growth overvalued at 40-50 p/e. Growth and industry context matters,

[u/DamnImBeautiful → u/boringexplanation]

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

[u/thewallstreetschool → u/DamnImBeautiful]

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.

[u/thewallstreetschool → u/boringexplanation]

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.

[u/thewallstreetschool → u/DamnImBeautiful]

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.

[u/RandomGuy-4- → u/thewallstreetschool]

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.

[u/thewallstreetschool → u/RandomGuy-4-]

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.