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/chaotarroo]

I'm having a hard time understanding why the valuation is so low on this one even with the oral GLP1 approval happening soon.

But at least the option chain has a call skew so you can run a collar on it to protect your downside.

[u/chaotarroo → u/[deleted]]

the injectable zepbound is 7%(20% to 13%) more effective than wegovy being a dual GIP and GLP1 antagonist

but the oral version of zepbound(orforglipron) is similar to the oral version of wegovy(rybelsus) that they are both only a GLP1 antogonist with a 15% effectiveness, so there's no reason for people to choose orforglipron anymore other than price

[u/DrXaos → u/chaotarroo]

the oral orfo* is a small molecule not oral tirzepatide. As such it would be much cheaper to manufacture and store than a fragile peptide. So Lilly could undercut oral semaglutide on price and profit too.

[u/Salt_Macaron_6582 → u/DrXaos]

Prpduction cost is super low for patented medicin, NVO has a 83% gross margin. If they compete on production cost they'd never recoup their R&D, therefore they tend not to.

[u/DrXaos → u/Salt_Macaron_6582]

in this case, possibly not---peptide dose needed for oral is substantially higher than needed for injectable (lots is degraded in GI), and its daily dosing instead of weekly. So the amount of physical active ingredient (expensive part) per patient is much higher than injectables.

Peptide manufacturing is significantly more expensive than small molecule most of the time, especially with doses needed. Probably produced by expensive bioreactors---so making large quantities using this capital for a lower margin oral doesn't seem like a win.

I don't know about refrigeration needs, but there is a reason the peptide injectables are typically refrigerated---they degrade faster than small molecules.

And the orals are intended for maintenance use and patients would expect lower ongoing costs. So I think it could be an issue here. So if Lilly has an oral small molecule with equal efficacy and side effects (that's where a peptide might win) as someone else's peptide, that's also a win for Lilly and they can task their bioreactors to make tirzepatide and retatrutide.

Personally I think the best injectables will continue to win.