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Are These Basic Materials Stocks Undervalued Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Yamana Gold (AUY) is a stock many investors are watching right now. AUY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.69. This compares to its industry's average Forward P/E of 15.12. Over the past year, AUY's Forward P/E has been as high as 19.28 and as low as 10.88, with a median of 13.61.

Another notable valuation metric for AUY is its P/B ratio of 0.82. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.20. Within the past 52 weeks, AUY's P/B has been as high as 0.99 and as low as 0.71, with a median of 0.81.

Finally, investors should note that AUY has a P/CF ratio of 7.04. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AUY's current P/CF looks attractive when compared to its industry's average P/CF of 7.54. Within the past 12 months, AUY's P/CF has been as high as 8.79 and as low as 6.14, with a median of 7.11.

Gold Resource (GORO) may be another strong Mining - Gold stock to add to your shortlist. GORO is a # 2 (Buy) stock with a Value grade of A.

Gold Resource sports a P/B ratio of 1.38 as well; this compares to its industry's price-to-book ratio of 1.20. In the past 52 weeks, GORO's P/B has been as high as 2.49, as low as 1.20, with a median of 1.77.

These are only a few of the key metrics included in Yamana Gold and Gold Resource strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, AUY and GORO look like an impressive value stock at the moment.


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Yamana Gold Inc. (AUY) : Free Stock Analysis Report
 
Gold Resource Corporation (GORO) : Free Stock Analysis Report
 
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