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Are These Basic Materials Stocks a Great Value Stocks Right Now?

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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 value investors might notice is BASF (BASFY - Free Report) . BASFY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 10.98 right now. For comparison, its industry sports an average P/E of 11.57. Over the past year, BASFY's Forward P/E has been as high as 16.89 and as low as 9.85, with a median of 11.99.

Investors should also recognize that BASFY has a P/B ratio of 1.40. 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 attractive against its industry's average P/B of 2.31. Over the past 12 months, BASFY's P/B has been as high as 2.04 and as low as 1.26, with a median of 1.54.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BASFY has a P/S ratio of 0.72. This compares to its industry's average P/S of 0.89.

Finally, investors should note that BASFY has a P/CF ratio of 6.14. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.37. Within the past 12 months, BASFY's P/CF has been as high as 12.29 and as low as 5.51, with a median of 6.83.

If you're looking for another solid Chemical - Diversified value stock, take a look at Tronox (TROX - Free Report) . TROX is a # 2 (Buy) stock with a Value score of A.

Furthermore, Tronox holds a P/B ratio of 1.57 and its industry's price-to-book ratio is 2.31. TROX's P/B has been as high as 2.02, as low as 1.22, with a median of 1.75 over the past 12 months.

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


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