Buying a stock for less than it's worth is what value investing is all about. Calculating a stock's true value is the hard part -- stocks that look cheap sometimes aren't, and stocks that look expensive can sometimes be cheap. A company's growth potential is an important component of its value, so focusing strictly on price-to-earnings ratios can lead you astray.

Three of our Motley Fool investors have some ideas when it comes to value stocks. Here's why you should take a look at International Business Machines (NYSE:IBM), Micron Technology (NASDAQ:MU), and Dentsply Sirona (NASDAQ:XRAY).

Puzzle pieces spelling out Value.

Image source: Getty Images.

A cheap turnaround play

Tim Green (International Business Machines): Shares of IBM have been cheap for a while. Since peaking in early 2013, the stock has shed around one-third of its value. A half-decade of declining revenue and a turnaround that was slow to show results made it easy for investors to be pessimistic.

Revenue is now growing again at IBM, and earnings have likely bottomed out. The company expects to produce $13.80 in per-share adjusted earnings this year, putting the price-to-earnings ratio at just about 10. Add to that a dividend yield near 4.5%, and you have a value dividend stock that's hard to pass up.

Beyond a rock-bottom valuation, why should you bet on IBM? For one, the company's vast base of large enterprise customers and its entrenched status in many industries give it an edge selling newer technologies like cloud computing, artificial intelligence, and blockchain. A recent example: IBM signed a $320 million deal last month with Danish tech company KMD. The two companies have a relationship that goes back decades.

The market continues to doubt IBM's comeback, so don't be surprised if the stock remains stuck in the doldrums for a while longer. The company will need to put up a longer streak of growth to convince investors that its turnaround is the real deal.

It's cheap, it's growing, it's... Micron?

Nicholas Rossolillo (Micron): The memory chipmaker from Idaho recently reported results for its fiscal third quarter of 2018 to little fanfare; shares have fallen over 4% as of this writing. Yet revenue grew 40% year over year and earnings per share a staggering 121% as digital memory is finding new life in data centers, connected industrial equipment, and cars.

Unit sales have been growing by double digits, and that strong demand has created another positive development: better pricing for Micron. Gross margins were 60.5% compared with 41.9% and 53.1% one quarter and one year ago, respectively. The surge in profitability was used to reduce debt by $1.1 billion, and management also announced that a new share repurchase program will commence at the start of the company's new fiscal year in late 2018. The return to shareholders? $10 billion, roughly 15% of Micron's entire enterprise value after the stock's decline.

There are, of course, detractors calling for an end to the run-up in memory chip prices, and with Micron literally firing on all cylinders, I'll admit it does seem like at least a bump in the road is due when looking at the stock's doubling in price over the last year. The problem with that thinking, though, is that a setback is already priced in. Trailing price to earnings is a mere 6.9, and the one-year forward figure is only 5.0. That's absurdly cheap for a company that's posting solid growth and expects tailwinds to continue propelling business forward. Micron, you have my attention.

This dentistry stock might be a bargain

Todd Campbell (Dentsply Sirona): Shares of Dentsply Sirona, a leading provider of machinery and consumables used in dentistry, have been retreating lately on concerns over U.S. sales. The sell-off has the stock trading at a price-to-book ratio of 1.5, and that's its lowest level since Dentsply and Sirona merged in 2016.

Worries about sluggish U.S. sales in its technologies and equipment segment can't be totally ignored, but the segment's sales overseas are still growing and overall, total company revenue in the first quarter hung tough, climbing 6% year over year, including currency changes, and falling 1.1% year over year, ex-currency, in Q1 2018.

Dentsply Sirona blames changes to dealer inventory for the U.S. headwinds. If that's true, then we should know in a couple of quarters if slower sales are due to that or something more serious. If U.S. sales do stabilize, then plans to shave $100 million in expenses should help increase earnings, which were $0.45 per share in Q1 -- $0.03 better than analysts were estimating.

Below are revenue and growth figures for Q1 2018:

Results by Region

Q1 Sales

YOY Growth

YOY Growth (Ex-Currency)


$292 million




$426 million



Rest of world

$239 million



Total sales

$956 million



YOY = year over year.

Results by Segment Q1 Sales YOY Growth YOY Growth (Ex-Currency)
Consumables $448 million 6% 0%
Technologies and equipment $508 million 6% (2%)
Total sales $956 million 6%  (1%)

The real reason investors ought to spend time getting to know Dentsply Sirona, though, is that demand for dental care should increase as the global population lives longer and becomes increasingly larger and wealthier. This trend could provide the company with decades of profit-friendly opportunities. If I'm right, then picking up shares now could be smart, especially since it boasts one of the lowest price-to-book ratios among large-cap stocks in healthcare.