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 labeled as a value stock.

Below is a list of notable value stocks in the basic materials sector:

1. FutureFuel FF - P/E: 4.32
2. Turquoise Hill Resources TRQ - P/E: 5.0
3. Ciner Resources CINR - P/E: 4.91
4. Koppers Hldgs KOP - P/E: 5.74
5. Schweitzer-Mauduit Intl SWM - P/E: 9.43

FutureFuel has reported Q2 earnings per share at 0.35, which has decreased by 20.45% compared to Q1, which was 0.44. FutureFuel does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Turquoise Hill Resources has reported Q2 earnings per share at 0.04, which has increased by 33.33% compared to Q1, which was 0.03. Turquoise Hill Resources does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

This quarter, Ciner Resources experienced a decrease in earnings per share, which was 0.34 in Q1 and is now -0.17. 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%.

Most recently, Koppers Hldgs reported earnings per share at 1.27, whereas in Q1 earnings per share sat at 0.47. Koppers Hldgs does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, Schweitzer-Mauduit Intl reported earnings per share at 0.9, whereas in Q1 earnings per share sat at 0.85. Its most recent dividend yield is at 5.48%, which has decreased by 0.54% from 6.02% 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.