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.
Below is a list of notable value stocks in the basic materials sector:
- CF Industries Holdings (NYSE:CF) – P/E: 4.01
- ICL Group (NYSE:ICL) – P/E: 3.93
- West Fraser Timber (NYSE:WFG) – P/E: 6.85
- Reliance Steel & Aluminum (NYSE:RS) – P/E: 8.29
- LyondellBasell Industries (NYSE:LYB) – P/E: 9.35
Most recently, CF Industries Holdings reported earnings per share at $2.85, whereas in Q4 earnings per share sat at $4.35. Most recently, the company reported a dividend yield of 2.16%, which has increased by 0.23% from last quarter’s yield of 1.93%.
ICL Group saw a decrease in earnings per share from 0.28 in Q4 to $0.23 now. Most recently, the company reported a dividend yield of 7.56%, which has increased by 0.35% from last quarter’s yield of 7.21%.
West Fraser Timber’s earnings per share for Q1 sits at $-0.52, whereas in Q4, they were at -1.13. Most recently, Reliance Steel & Aluminum reported earnings per share at $6.37, whereas in Q4 earnings per share sat at $5.87. Its most recent dividend yield is at 1.6%, which has decreased by 0.13% from 1.73% in the previous quarter.
This quarter, LyondellBasell Industries experienced an increase in earnings per share, which was $1.29 in Q4 and is now $2.5. The company’s most recent dividend yield sits at 5.55%, which has increased by 0.52% from 5.03% last 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.
