This Value Stock Is Up 69% in the Past Year; Here's Why I'm Avoiding It
Since the start of 2021, student lender Navient (NASDAQ: NAVI) has seen its stock run up an eye-popping 69%, crushing the S&P 500's total return of 15% during the same time.
Navient is a stock that looks quite cheap, trading at a price-to-earnings ratio (P/E) just under 4. Given its big run-up along with its cheap price, value investors might be tempted to jump on it. However, I'm skeptical of the company and believe value investors are better off looking elsewhere. Here's why.
Navient's student loan business has faced uncertainty in recent years. Earlier this month the lender settled a decade-old lawsuit brought against it by 38 states. Those states accused the lender of predatory behavior, including steering customers to costly repayment plans rather than more affordable income-based repayment plans. Navient ultimately settled the lawsuit for $1.85 billion, which included canceling $1.7 billion in loans to 66,000 borrowers. In a statement, it denied breaking any laws or causing harm to borrowers, saying the matter was "based on unfounded claims."
Source Fool.com
