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. Commercial Metals CMC - P/E: 8.46
2. Ciner Resources CINR - P/E: 5.25
3. FutureFuel FF - P/E: 5.74
4. Warrior Met Coal HCC - P/E: 3.89
5. Orion Engineered Carbons OEC - P/E: 7.43

This quarter, Commercial Metals experienced an increase in earnings per share, which was 0.53 in Q2 and is now 0.59. Its most recent dividend yield is at 2.62%, which has decreased by 0.99% from 3.61% in the previous quarter.

This quarter, Ciner Resources experienced a decrease in earnings per share, which was 0.55 in Q4 and is now 0.34. Most recently, the company reported a dividend yield of 12.04%, which has increased by 4.46% from last quarter’s yield of 7.58%.

FutureFuel’s earnings per share for Q1 sits at 0.44, whereas in Q4, they were at 1.65. FutureFuel does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Warrior Met Coal has reported Q1 earnings per share at 0.39, which has increased by 69.57% compared to Q4, which was 0.23. The company’s most recent dividend yield sits at 1.23%, which has decreased by 0.61% from 1.84% last quarter.

Most recently, Orion Engineered Carbons reported earnings per share at 0.44, whereas in Q4 earnings per share sat at 0.42. Its most recent dividend yield is at 5.63%, which has increased by 0.63% from 5.0% 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.