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Are Investors Undervaluing These Basic Materials Stocks Right Now?

Zacks Equity Research
·2-min read

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 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.

One company to watch right now is AdvanSix (ASIX). ASIX is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 8.85, which compares to its industry's average of 19.19. Over the last 12 months, ASIX's Forward P/E has been as high as 13.39 and as low as 8.06, with a median of 9.69.

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Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ASIX has a P/S ratio of 0.77. This compares to its industry's average P/S of 2.05.

Hawkins (HWKN) may be another strong Chemical - Specialty stock to add to your shortlist. HWKN is a # 2 (Buy) stock with a Value grade of A.

Furthermore, Hawkins holds a P/B ratio of 2.81 and its industry's price-to-book ratio is 8.33. HWKN's P/B has been as high as 3.21, as low as 2.07, with a median of 2.68 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that AdvanSix and Hawkins are likely undervalued currently. And when considering the strength of its earnings outlook, ASIX and HWKN sticks out as one of the market's strongest value stocks.


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AdvanSix (ASIX) : Free Stock Analysis Report
 
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research