The Meaning Behind 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.

Benzinga Insights has compiled a list of value stocks in the basic materials sector that may be worth watching:

1. FutureFuel FF - P/E: 4.59
2. Verso VRS - P/E: 1.67
3. Koppers Hldgs KOP - P/E: 5.75
4. Boise Cascade BCC - P/E: 9.72
5. Commercial Metals CMC - P/E: 8.73

FutureFuel’s earnings per share for Q3 sits at 0.16, whereas in Q2, they were at 0.35. FutureFuel does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

This quarter, Verso experienced an increase in earnings per share, which was -0.99 in Q2 and is now -0.92. Verso does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Koppers Hldgs saw an increase in earnings per share from 1.27 in Q2 to 1.64 now. Koppers Hldgs does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Boise Cascade has reported Q3 earnings per share at 2.88, which has increased by 238.82% compared to Q2, which was 0.85. Boise Cascade does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Commercial Metals saw an increase in earnings per share from 0.59 in Q3 to 0.79 now. Most recently, the company reported a dividend yield of 2.08%, which has decreased by 0.54% from last quarter’s yield of 2.62%.

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.