What Defines 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.
Below is a list of notable value stocks in the basic materials sector:
- Kinross Gold (NYSE:KGC) – P/E: 5.56
- Resolute Forest Products (NYSE:RFP) – P/E: 2.4
- Friedman Industries (AMEX:FRD) – P/E: 8.16
- Hycroft Mining Holding (NASDAQ:HYMC) – P/E: 0.32
- LyondellBasell Industries (NYSE:LYB) – P/E: 7.97
Kinross Gold saw a decrease in earnings per share from 0.15 in Q1 to 0.12 now. The company’s most recent dividend yield sits at 1.95%, which has increased by 0.4% from 1.55% last quarter.
Resolute Forest Products saw an increase in earnings per share from 1.45 in Q1 to 3.74 now. Resolute Forest Products does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Most recently, Friedman Industries reported earnings per share at 1.5, whereas in Q3 earnings per share sat at 0.3. Its most recent dividend yield is at 0.56%, which has decreased by 0.44% from 1.0% in the previous quarter.
Hycroft Mining Holding saw an increase in earnings per share from -0.16 in Q1 to -0.14 now. Hycroft Mining Holding does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Most recently, LyondellBasell Industries reported earnings per share at 6.13, whereas in Q1 earnings per share sat at 3.18. Most recently, the company reported a dividend yield of 4.65%, which has increased by 0.67% from last quarter’s yield of 3.98%.
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.
