Should Value Investors Buy These Basic Materials Stocks?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Chemours (CC) is a stock many investors are watching right now. CC is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 7.47 right now. For comparison, its industry sports an average P/E of 12.37. Over the last 12 months, CC's Forward P/E has been as high as 12.18 and as low as 6.94, with a median of 9.72.
Investors should also note that CC holds a PEG ratio of 0.21. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CC's industry has an average PEG of 0.59 right now. Within the past year, CC's PEG has been as high as 0.45 and as low as 0.21, with a median of 0.29.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CC has a P/S ratio of 0.83. This compares to its industry's average P/S of 0.95.
Finally, we should also recognize that CC has a P/CF ratio of 7.58. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CC's P/CF compares to its industry's average P/CF of 11.21. CC's P/CF has been as high as 22.03 and as low as 6.51, with a median of 9.06, all within the past year.
Olin (OLN) may be another strong Chemical - Diversified stock to add to your shortlist. OLN is a # 1 (Strong Buy) stock with a Value grade of A.
Olin is currently trading with a Forward P/E ratio of 6.67 while its PEG ratio sits at 0.12. Both of the company's metrics compare favorably to its industry's average P/E of 12.37 and average PEG ratio of 0.59.
OLN's Forward P/E has been as high as 397.65 and as low as 6.42, with a median of 9.16. During the same time period, its PEG ratio has been as high as 10.66, as low as 0.11, with a median of 0.14.
Olin also has a P/B ratio of 4.01 compared to its industry's price-to-book ratio of 2.48. Over the past year, its P/B ratio has been as high as 4.78, as low as 2.32, with a median of 3.64.
These are only a few of the key metrics included in Chemours and Olin strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, CC and OLN look like an impressive value stock at the moment.
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