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.
The following stocks are considered to be notable value stocks in the basic materials sector:
- New Gold (AMEX:NGD) - P/E: 7.86
- TimkenSteel (NYSE:TMST) - P/E: 8.2
- Resolute Forest Products (NYSE:RFP) - P/E: 3.19
- Dow (NYSE:DOW) - P/E: 7.01
- Equinox Gold (AMEX:EQX) - P/E: 4.1
New Gold has reported Q4 earnings per share at $0.04, which has increased by 33.33% compared to Q3, which was 0.03. TimkenSteel saw a decrease in earnings per share from 1.04 in Q3 to $0.8 now. Resolute Forest Products's earnings per share for Q4 sits at $0.48, whereas in Q3, they were at 0.84. Dow has reported Q4 earnings per share at $2.15, which has decreased by 21.82% compared to Q3, which was 2.75. Most recently, the company reported a dividend yield of 4.52%, which has decreased by 0.4% from last quarter's yield of 4.92%.
This quarter, Equinox Gold experienced an increase in earnings per share, which was $0.02 in Q3 and is now $0.25.
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.
