What is a Value Stock?

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. Turquoise Hill Resources TRQ - P/E: 6.65
2. Ciner Resources CINR - P/E: 4.08
3. FutureFuel FF - P/E: 4.63
4. Ramaco Resources METC - P/E: 9.45
5. Commercial Metals CMC - P/E: 8.33

This quarter, Turquoise Hill Resources experienced an increase in earnings per share, which was 0.03 in Q1 and is now 0.04. Turquoise Hill Resources does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Ciner Resources saw a decrease in earnings per share from 0.34 in Q1 to -0.17 now. Its most recent dividend yield is at 12.04%, which has increased by 4.46% from 7.58% in the previous quarter.

This quarter, FutureFuel experienced a decrease in earnings per share, which was 0.44 in Q1 and is now 0.35. FutureFuel does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Ramaco Resources saw an increase in earnings per share from 0.05 in Q1 to 0.06 now. Ramaco Resources does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

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.

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.