What are 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 labelled as a value stock.
The following stocks are considered to be notable value stocks in the basic materials sector:
- LyondellBasell Industries (NYSE:LYB) – P/E: 7.91
- Olympic Steel (NASDAQ:ZEUS) – P/E: 5.56
- Commercial Metals (NYSE:CMC) – P/E: 9.41
- Boise Cascade (NYSE:BCC) – P/E: 3.97
- Tronox Holdings (NYSE:TROX) – P/E: 3.61
Most recently, LyondellBasell Industries reported earnings per share at 6.13, whereas in Q1 earnings per share sat at 3.18. The company’s most recent dividend yield sits at 4.65%, which has increased by 0.67% from 3.98% last quarter.
This quarter, Olympic Steel experienced an increase in earnings per share, which was 1.97 in Q1 and is now 2.84. Its most recent dividend yield is at 0.28%, which has increased by 0.03% from 0.25% in the previous quarter.
Most recently, Commercial Metals reported earnings per share at 1.26, whereas in Q3 earnings per share sat at 1.04. Its most recent dividend yield is at 1.74%, which has increased by 0.27% from 1.47% in the previous quarter.
Most recently, Boise Cascade reported earnings per share at 7.62, whereas in Q1 earnings per share sat at 3.76. Boise Cascade does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Tronox Holdings saw an increase in earnings per share from 0.43 in Q1 to 0.61 now. Its most recent dividend yield is at 2.19%, which has increased by 0.77% from 1.42% 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.