Understanding Value Stocks
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.
The following stocks are considered to be notable value stocks in the consumer cyclical sector:
- Lithia Motors (NYSE:LAD) – P/E: 5.35
- General Motors (NYSE:GM) – P/E: 5.2
- Bluegreen Vacations (NYSE:BVH) – P/E: 8.08
- Malibu Boats (NASDAQ:MBUU) – P/E: 7.08
- FGI Industries (NASDAQ:FGI) – P/E: 4.44
Lithia Motors has reported Q1 earnings per share at $8.44, which has decreased by 6.74% compared to Q4, which was 9.05. Most recently, the company reported a dividend yield of 0.88%, which has increased by 0.28% from last quarter’s yield of 0.6%.
General Motors’s earnings per share for Q1 sits at $2.21, whereas in Q4, they were at 2.12. The company’s most recent dividend yield sits at 1.07%, which has increased by 0.15% from 0.92% last quarter.
Bluegreen Vacations’s earnings per share for Q1 sits at $0.71, whereas in Q4, they were at 0.61. Most recently, the company reported a dividend yield of 2.47%, which has decreased by 1.2% from last quarter’s yield of 3.67%.
Malibu Boats has reported Q3 earnings per share at $2.59, which has increased by 41.53% compared to Q2, which was 1.83. FGI Industries has been featured as a value stock. FGI Industries’s Q4 EPS sits at $0.11, which has not changed since last quarter (Q3).
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.
