The Meaning Behind 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 basic materials sector:
- Reliance Steel & Aluminum RS - P/E: 6.06
- Flexible Solutions Intl FSI - P/E: 6.24
- West Fraser Timber WFG - P/E: 3.43
- Alpha Metallurgical AMR - P/E: 2.19
- Olympic Steel ZEUS - P/E: 2.05
Reliance Steel & Aluminum saw an increase in earnings per share from 8.42 in Q1 to $9.15 now. Its most recent dividend yield is at 1.89%, which has increased by 0.05% from 1.84% in the previous quarter.
Flexible Solutions Intl has reported Q2 earnings per share at $0.13, which has increased by 8.33% compared to Q1, which was 0.12. West Fraser Timber saw a decrease in earnings per share from 10.25 in Q1 to $7.59 now. Alpha Metallurgical's earnings per share for Q2 sits at $30.03, whereas in Q1, they were at 20.52. Most recently, the company reported a dividend yield of 1.18%, which has increased by 0.26% from last quarter's yield of 0.92%.
This quarter, Olympic Steel experienced an increase in earnings per share, which was $3.1 in Q1 and is now $3.26. The company's most recent dividend yield sits at 1.2%, which has increased by 0.2% from 1.0% last quarter.
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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