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.
The following stocks are considered to be notable value stocks in the basic materials sector:
- Suzano (NYSE:SUZ) - P/E: 5.47
- Origin Mat (NASDAQ:ORGN) - P/E: 3.25
- Clearwater Paper (NYSE:CLW) - P/E: 6.19
- Warrior Met Coal (NYSE:HCC) - P/E: 6.67
- CVR Partners (NYSE:UAN) - P/E: 4.02
Suzano has reported Q4 earnings per share at $0.7, which has increased by 683.33% compared to Q3, which was -0.12. Origin Mat saw a decrease in earnings per share from 0.22 in Q3 to $-0.07 now. Clearwater Paper's earnings per share for Q4 sits at $1.35, whereas in Q3, they were at 2.19. Most recently, Warrior Met Coal reported earnings per share at $2.49, whereas in Q3 earnings per share sat at $1.85. CVR Partners has reported Q4 earnings per share at $0.94, which has increased by 1242.86% compared to Q3, which was 0.07. The company's most recent dividend yield sits at 9.28%, which has increased by 1.36% from 7.92% 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.