The Meaning Behind 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:
- Valhi (NYSE:VHI) - P/E: 8.46
- Constellium (NYSE:CSTM) - P/E: 5.68
- Steel Dynamics (NASDAQ:STLD) - P/E: 4.23
- Alto Ingredients (NASDAQ:ALTO) - P/E: 9.21
- CVR Partners (NYSE:UAN) - P/E: 8.33
Valhi's earnings per share for Q1 sits at $1.59, whereas in Q4, they were at 1.83. The company's most recent dividend yield sits at 1.27%, which has decreased by 0.11% from 1.38% last quarter.
Constellium saw an increase in earnings per share from 0.06 in Q4 to $1.35 now. This quarter, Steel Dynamics experienced an increase in earnings per share, which was $5.78 in Q4 and is now $6.02. Its most recent dividend yield is at 1.97%, which has increased by 0.34% from 1.63% in the previous quarter.
Alto Ingredients saw an increase in earnings per share from -0.05 in Q3 to $0.49 now. CVR Partners's earnings per share for Q1 sits at $8.78, whereas in Q4, they were at 5.76. Most recently, the company reported a dividend yield of 20.96%, which has increased by 6.14% from last quarter's yield of 14.82%.
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.
