A Look Into Basic Materials Sector Value Stocks

What Defines a Value Stock?

A value stock traditionally has a lower price when compared to stock prices of companies in the same industry. This indicates that the company may be undervalued, as investors are not expressing as much interest in such companies. The most commonly used way to check for value is with the price-to-earnings multiple, or P/E. A low P/E multiple is a good indication that the stock is undervalued.

The following stocks are considered to be notable value stocks in the basic materials sector:

1. Commercial Metals CMC - P/E: 7.41
2. Galiano Gold GAU - P/E: 3.67
3. Ero Copper ERO - P/E: 6.26
4. Reliance Steel & Aluminum RS - P/E: 9.27
5. Hudson Technologies HDSN - P/E: 8.58

Commercial Metals's earnings per share for Q1 sits at 1.62, whereas in Q4, they were at 1.26. Most recently, the company reported a dividend yield of 1.5%, which has decreased by 0.24% from last quarter's yield of 1.74%.

Galiano Gold has been featured as a value stock. Galiano Gold's Q3 EPS sits at 0.02, which has not changed since last quarter (Q2). This quarter, Ero Copper experienced a decrease in earnings per share, which was 0.58 in Q2 and is now 0.49. Reliance Steel & Aluminum saw an increase in earnings per share from 5.06 in Q2 to 6.15 now. Its most recent dividend yield is at 1.8%, which has decreased by 0.1% from 1.9% in the previous quarter.

Most recently, Hudson Technologies reported earnings per share at 0.34, whereas in Q2 earnings per share sat at 0.24.

The Significance: A value stock may need some time to rebound from its undervalued position. The risk of investing in a value stock is that this emergence may never materialize.