Understanding 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.
The following stocks are considered to be notable value stocks in the basic materials sector:
- Flexible Solutions Intl FSI – P/E: 7.96
- B2Gold BTG – P/E: 9.77
- Equinox Gold EQX – P/E: 3.61
- TimkenSteel TMST – P/E: 4.93
- Caledonia Mining CMCL – P/E: 8.41
Flexible Solutions Intl saw a decrease in earnings per share from 0.09 in Q3 to $-0.02 now. B2Gold saw a decrease in earnings per share from 0.11 in Q4 to $0.06 now. The company’s most recent dividend yield sits at 3.89%, which has increased by 0.07% from 3.82% last quarter.
Most recently, Equinox Gold reported earnings per share at $-0.08, whereas in Q4 earnings per share sat at $0.25. TimkenSteel has reported Q1 earnings per share at $0.92, which has increased by 15.0% compared to Q4, which was 0.8. Caledonia Mining has reported Q4 earnings per share at $0.42, which has decreased by 39.13% compared to Q3, which was 0.69. The company’s most recent dividend yield sits at 3.68%, which has decreased by 1.12% from 4.8% last 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.