Understanding Value Stocks
A value stock is traditionally defined in terms of how investors in the marketplace are valuing that company's future growth prospects. Low P/E multiples are good base indicators that the company is undervalued and can most likely be labelled as a value stock.
The following stocks are considered to be notable value stocks in the consumer cyclical sector:
- Build-A-Bear Workshop BBW - P/E: 5.35
- Gildan Activewear GIL - P/E: 8.71
- MasterCraft Boat Hldgs MCFT - P/E: 7.43
- D.R. Horton DHI - P/E: 4.65
- Harley-Davidson HOG - P/E: 9.71
Build-A-Bear Workshop's earnings per share for Q1 sits at $0.89, whereas in Q4, they were at 0.97. Gildan Activewear saw an increase in earnings per share from 0.76 in Q1 to $0.86 now. Most recently, the company reported a dividend yield of 2.29%, which has increased by 0.36% from last quarter's yield of 1.93%.
MasterCraft Boat Hldgs has reported Q3 earnings per share at $1.21, which has increased by 32.97% compared to Q2, which was 0.91. D.R. Horton has reported Q3 earnings per share at $4.67, which has increased by 15.88% compared to Q2, which was 4.03. The company's most recent dividend yield sits at 1.23%, which has increased by 0.02% from 1.21% last quarter.
Harley-Davidson has reported Q2 earnings per share at $1.46, which has increased by 0.69% compared to Q1, which was 1.45. Most recently, the company reported a dividend yield of 1.78%, which has increased by 0.02% from last quarter's yield of 1.76%.
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.
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