What is a Value Stock?
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:
- Braskem (NYSE:BAK) – P/E: 4.73
- Nexa Resources (NYSE:NEXA) – P/E: 6.65
- Caledonia Mining Corp (AMEX:CMCL) – P/E: 8.61
- Equinox Gold (AMEX:EQX) – P/E: 3.69
- Mosaic (NYSE:MOS) – P/E: 9.14
Braskem saw an increase in earnings per share from 0.57 in Q1 to 2.35 now. Its most recent dividend yield is at 7.77%, which has increased by 2.39% from 5.38% in the previous quarter.
This quarter, Nexa Resources experienced an increase in earnings per share, which was 0.17 in Q1 and is now 0.82. Most recently, the company reported a dividend yield of 2.62%, which has decreased by 1.75% from last quarter’s yield of 4.37%.
Caledonia Mining Corp saw an increase in earnings per share from 0.52 in Q1 to 0.63 now. Most recently, the company reported a dividend yield of 4.36%, which has increased by 1.0% from last quarter’s yield of 3.36%.
This quarter, Equinox Gold experienced an increase in earnings per share, which was -0.02 in Q1 and is now 0.01. Equinox Gold does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Mosaic has reported Q2 earnings per share at 1.17, which has increased by 105.26% compared to Q1, which was 0.57. Its most recent dividend yield is at 0.85%, which has decreased by 0.03% from 0.88% 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.
