Australia markets closed
  • ALL ORDS

    7,391.00
    +87.70 (+1.20%)
     
  • ASX 200

    7,145.60
    +81.10 (+1.15%)
     
  • AUD/USD

    0.7037
    -0.0012 (-0.17%)
     
  • OIL

    112.70
    +0.49 (+0.44%)
     
  • GOLD

    1,845.10
    +3.90 (+0.21%)
     
  • BTC-AUD

    41,521.21
    -1,776.28 (-4.10%)
     
  • CMC Crypto 200

    650.34
    -23.03 (-3.42%)
     
  • AUD/EUR

    0.6659
    +0.0002 (+0.03%)
     
  • AUD/NZD

    1.0973
    -0.0065 (-0.59%)
     
  • NZX 50

    11,267.39
    +60.46 (+0.54%)
     
  • NASDAQ

    11,835.62
    -40.01 (-0.34%)
     
  • FTSE

    7,389.98
    +87.24 (+1.19%)
     
  • Dow Jones

    31,261.90
    +8.77 (+0.03%)
     
  • DAX

    13,981.91
    +99.61 (+0.72%)
     
  • Hang Seng

    20,717.24
    +596.56 (+2.96%)
     
  • NIKKEI 225

    26,739.03
    +336.19 (+1.27%)
     

Should Value Investors Buy These Basic Materials Stocks?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Eldorado Gold (EGO). EGO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 12.24, while its industry has an average P/E of 14.76. Over the past year, EGO's Forward P/E has been as high as 21.21 and as low as 10.15, with a median of 12.80.

We should also highlight that EGO has a P/B ratio of 0.47. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.17. Over the past 12 months, EGO's P/B has been as high as 0.64 and as low as 0.37, with a median of 0.49.

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. EGO has a P/S ratio of 1.73. This compares to its industry's average P/S of 2.22.

Another great Mining - Gold stock you could consider is Harmony Gold (HMY), which is a # 2 (Buy) stock with a Value Score of A.

Harmony Gold is currently trading with a Forward P/E ratio of 6.53 while its PEG ratio sits at 0.55. Both of the company's metrics compare favorably to its industry's average P/E of 14.76 and average PEG ratio of 1.94.

HMY's price-to-earnings ratio has been as high as 11.81 and as low as 3.66, with a median of 7.28, while its PEG ratio has been as high as 1 and as low as 0.37, with a median of 0.55, all within the past year.

Harmony Gold sports a P/B ratio of 1.13 as well; this compares to its industry's price-to-book ratio of 1.17. In the past 52 weeks, HMY's P/B has been as high as 1.73, as low as 0.91, with a median of 1.18.

These are just a handful of the figures considered in Eldorado Gold and Harmony Gold's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that EGO and HMY is an impressive value stock right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Eldorado Gold Corporation (EGO) : Free Stock Analysis Report
 
Harmony Gold Mining Company Limited (HMY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting