What are Value Stocks?

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. FutureFuel (NYSE:FF) - P/E: 8.62
2. Commercial Metals (NYSE:CMC) - P/E: 7.76
3. CVR Partners (NYSE:UAN) - P/E: 2.78
4. Alpha Metallurgical (NYSE:AMR) - P/E: 7.16
5. Albemarle (NYSE:ALB) - P/E: 4.56

FutureFuel's earnings per share for Q3 sits at $0.06, whereas in Q2, they were at -0.23. The company's most recent dividend yield sits at 2.78%, which has ('', 'not changed') by 0.0% from 2.78% last quarter.

Most recently, Commercial Metals reported earnings per share at $1.63, whereas in Q4 earnings per share sat at $1.69. The company's most recent dividend yield sits at 1.31%, which has decreased by 0.02% from 1.33% last quarter.

CVR Partners's earnings per share for Q3 sits at $0.07, whereas in Q2, they were at 5.66. Most recently, the company reported a dividend yield of 7.92%, which has decreased by 10.39% from last quarter's yield of 18.31%.

Alpha Metallurgical saw a decrease in earnings per share from 12.16 in Q2 to $6.65 now. Its most recent dividend yield is at 1.15%, which has decreased by 0.27% from 1.42% in the previous quarter.

Albemarle has reported Q3 earnings per share at $2.74, which has decreased by 62.62% compared to Q2, which was 7.33. Its most recent dividend yield is at 1.15%, which has increased by 0.48% from 0.67% in the previous 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.