What is 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.
The following stocks are considered to be notable value stocks in the basic materials sector:
- Westlake Chemical (NYSE:WLK) - P/E: 8.65
- Galiano Gold (AMEX:GAU) - P/E: 3.62
- Friedman Industries (AMEX:FRD) - P/E: 1.83
- Suzano (NYSE:SUZ) - P/E: 6.5
- Nexa Resources (NYSE:NEXA) - P/E: 6.49
Most recently, Westlake Chemical reported earnings per share at 4.69, whereas in Q2 earnings per share sat at 4.04. Its most recent dividend yield is at 1.17%, which has decreased by 0.23% from 1.4% in the previous quarter.
Galiano Gold has been featured as a value stock. Galiano Gold's Q3 EPS sits at 0.02, which has not changed since last quarter (Q2). Friedman Industries's earnings per share for Q2 sits at 1.91, whereas in Q1, they were at 1.64. The company's most recent dividend yield sits at 0.86%, which has increased by 0.2% from 0.66% last quarter.
Suzano saw a decrease in earnings per share from 1.4 in Q2 to -0.14 now. Nexa Resources has reported Q3 earnings per share at -0.14, which has decreased by 117.07% compared to Q2, which was 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%.
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.
