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.
Below is a list of notable value stocks in the basic materials sector:
- Constellium CSTM - P/E: 6.91
- ICL Group ICL - P/E: 6.68
- Nucor NUE - P/E: 3.84
- ArcelorMittal MT - P/E: 1.3
- Huntsman HUN - P/E: 4.49
Constellium's earnings per share for Q2 sits at $-0.26, whereas in Q1, they were at 1.35. This quarter, ICL Group experienced an increase in earnings per share, which was $0.47 in Q1 and is now $0.58. The company's most recent dividend yield sits at 12.25%, which has increased by 2.96% from 9.29% last quarter.
Nucor has reported Q2 earnings per share at $9.67, which has increased by 26.08% compared to Q1, which was 7.67. Its most recent dividend yield is at 1.66%, which has increased by 0.12% from 1.54% in the previous quarter.
ArcelorMittal has reported Q2 earnings per share at $4.24, which has decreased by 0.7% compared to Q1, which was 4.27. Its most recent dividend yield is at 1.28%, which has increased by 0.51% from 0.77% in the previous quarter.
Huntsman's earnings per share for Q2 sits at $1.28, whereas in Q1, they were at 1.19. Most recently, the company reported a dividend yield of 2.95%, which has increased by 0.56% from last quarter's yield of 2.39%.
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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