Understanding Value Stocks
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.
Below is a list of notable value stocks in the energy sector:
- Callon Petroleum (NYSE:CPE) - P/E: 4.89
- Canadian Natural Res (NYSE:CNQ) - P/E: 9.91
- Star Group (NYSE:SGU) - P/E: 6.65
- Laredo Petroleum (NYSE:LPI) - P/E: 5.46
- Flex LNG (NYSE:FLNG) - P/E: 8.62
Callon Petroleum saw an increase in earnings per share from 2.66 in Q4 to $3.43 now. Canadian Natural Res's earnings per share for Q1 sits at $2.26, whereas in Q4, they were at 1.75. Its most recent dividend yield is at 3.59%, which has decreased by 1.62% from 5.21% in the previous quarter.
Most recently, Star Group reported earnings per share at $1.75, whereas in Q1 earnings per share sat at $0.32. Its most recent dividend yield is at 5.58%, which has increased by 0.16% from 5.42% in the previous quarter.
This quarter, Laredo Petroleum experienced an increase in earnings per share, which was $3.39 in Q4 and is now $5.17. Flex LNG has reported Q1 earnings per share at $0.45, which has decreased by 61.86% compared to Q4, which was 1.18. Its most recent dividend yield is at 11.86%, which has decreased by 1.84% from 13.7% in the previous 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.
