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.
Benzinga Insights has compiled a list of value stocks in the basic materials sector that may be worth watching:
- West Fraser Timber (NYSE:WFG) - P/E: 2.87
- Resolute Forest Products (NYSE:RFP) - P/E: 2.63
- Boise Cascade (NYSE:BCC) - P/E: 3.75
- Celanese (NYSE:CE) - P/E: 6.9
- Steel Dynamics (NASDAQ:STLD) - P/E: 8.83
This quarter, West Fraser Timber experienced an increase in earnings per share, which was 6.96 in Q1 and is now 12.32. West Fraser Timber does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Resolute Forest Products has reported Q2 earnings per share at 3.74, which has increased by 157.93% compared to Q1, which was 1.45. Resolute Forest Products does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Boise Cascade's earnings per share for Q2 sits at 7.62, whereas in Q1, they were at 3.76. Boise Cascade does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Most recently, Celanese reported earnings per share at 5.02, whereas in Q1 earnings per share sat at 3.46. The company's most recent dividend yield sits at 1.76%, which has decreased by 0.03% from 1.79% last quarter.
Steel Dynamics's earnings per share for Q2 sits at 3.4, whereas in Q1, they were at 2.1. Its most recent dividend yield is at 1.55%, which has decreased by 0.12% from 1.67% 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.