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Should Value Investors Buy These Basic Materials Stocks?
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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.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Gold Resource (GORO - Free Report) is a stock many investors are watching right now. GORO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.12, while its industry has an average P/E of 14.70. GORO's Forward P/E has been as high as 304 and as low as 9.06, with a median of 16.28, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GORO has a P/S ratio of 1.07. This compares to its industry's average P/S of 2.55.
Finally, our model also underscores that GORO has a P/CF ratio of 6.90. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. GORO's P/CF compares to its industry's average P/CF of 7.37. Over the past 52 weeks, GORO's P/CF has been as high as 9.84 and as low as 4.51, with a median of 7.51.
If you're looking for another solid Mining - Gold value stock, take a look at Harmony Gold (HMY - Free Report) . HMY is a # 2 (Buy) stock with a Value score of A.
Harmony Gold is currently trading with a Forward P/E ratio of 6.32 while its PEG ratio sits at 0.54. Both of the company's metrics compare favorably to its industry's average P/E of 14.70 and average PEG ratio of 1.91.
HMY's Forward P/E has been as high as 11.81 and as low as 3.66, with a median of 7.33. During the same time period, its PEG ratio has been as high as 1, as low as 0.37, with a median of 0.56.
Harmony Gold also has a P/B ratio of 1.10 compared to its industry's price-to-book ratio of 1.17. Over the past year, its P/B ratio 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 Gold Resource 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 GORO and HMY is an impressive value stock right now.
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Should Value Investors Buy These Basic Materials Stocks?
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.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Gold Resource (GORO - Free Report) is a stock many investors are watching right now. GORO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.12, while its industry has an average P/E of 14.70. GORO's Forward P/E has been as high as 304 and as low as 9.06, with a median of 16.28, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GORO has a P/S ratio of 1.07. This compares to its industry's average P/S of 2.55.
Finally, our model also underscores that GORO has a P/CF ratio of 6.90. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. GORO's P/CF compares to its industry's average P/CF of 7.37. Over the past 52 weeks, GORO's P/CF has been as high as 9.84 and as low as 4.51, with a median of 7.51.
If you're looking for another solid Mining - Gold value stock, take a look at Harmony Gold (HMY - Free Report) . HMY is a # 2 (Buy) stock with a Value score of A.
Harmony Gold is currently trading with a Forward P/E ratio of 6.32 while its PEG ratio sits at 0.54. Both of the company's metrics compare favorably to its industry's average P/E of 14.70 and average PEG ratio of 1.91.
HMY's Forward P/E has been as high as 11.81 and as low as 3.66, with a median of 7.33. During the same time period, its PEG ratio has been as high as 1, as low as 0.37, with a median of 0.56.
Harmony Gold also has a P/B ratio of 1.10 compared to its industry's price-to-book ratio of 1.17. Over the past year, its P/B ratio 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 Gold Resource 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 GORO and HMY is an impressive value stock right now.