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.
Below is a list of notable value stocks in the basic materials sector:
- Dow (NYSE:DOW) – P/E: 6.49
- Jewett-Cameron Trading (NASDAQ:JCTCF) – P/E: 9.66
- Centerra Gold (NYSE:CGAU) – P/E: 1.31
- Ternium (NYSE:TX) – P/E: 2.26
- Constellium (NYSE:CSTM) – P/E: 6.02
Dow saw a decrease in earnings per share from 2.31 in Q2 to $1.11 now. Most recently, the company reported a dividend yield of 6.39%, which has increased by 1.08% from last quarter’s yield of 5.31%.
Jewett-Cameron Trading saw an increase in earnings per share from 0.08 in Q2 to $0.43 now. This quarter, Centerra Gold experienced an increase in earnings per share, which was $-0.12 in Q2 and is now $-0.06. Most recently, the company reported a dividend yield of 5.97%, which has increased by 1.54% from last quarter’s yield of 4.43%.
Ternium has reported Q3 earnings per share at $0.78, which has decreased by 80.84% compared to Q2, which was 4.07. Most recently, the company reported a dividend yield of 6.51%, which has decreased by 1.96% from last quarter’s yield of 8.47%.
Constellium’s earnings per share for Q3 sits at $0.89, whereas in Q2, they were at -0.26.
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.
