Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Metals & Mining - Iron & Steel industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Metals & Mining - Iron & Steel Stock News

Before choosing which top Metals & Mining - Iron & Steel stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The iron & steel industry was negatively impacted by pandemic-related economic shutdowns, supply chain disruptions and freezes in consumption. However, the industry has experienced a swift recovery in domestic steel demand, and steel prices were at multi-year highs at the start of 2021. As of April 28, 2021, steel prices were up 57% from the beginning of the year and up 156% compared to the full-year average price in 2020. Despite the increase in profitability for steel producers as a result, the higher prices may not be sustainable given significant excess capacity. 

Why Focus on Undervalued Metals & Mining - Iron & Steel Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Metals & Mining - Iron & Steel Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Metals & Mining - Iron & Steel industry for Monday, November 27, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Metals & Mining - Iron & Steel industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Algoma Steel Group Inc’s Value Grade

Value Grade:

Algoma Steel Group Inc. (Algoma) is a Canada-based integrated producer of hot and cold rolled steel products including sheet and plate. The Company delivers customer-driven product solutions to applications in the automotive, construction, energy, defense, and manufacturing sectors. The Company is a key supplier of steel products to customers in North America and is the only producer of discrete plate products in Canada. Its plate products include AR225, Heat Treated Plate, AlgoLaser, AlgoGrip and The Heavies. Its plate products include Hot Rolled Sheet - DSPC, Hot Rolled Sheet - 106'' Mill, AR200, Cold Rolled and Floor Plate. The Company has a raw steel production capacity of an estimated 2.8 million tons per year. Its Direct Strip Production Complex is a thin slab caster coupled with direct hot rolling in North America. In addition, its heat-treated plate facility provides a full range of heat-treated products for abrasion resistant, ballistic and other specialty plate applications.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Algoma Steel Group Inc has a Value Score of 91, which is considered to be undervalued.

When you look at Algoma Steel Group Inc’s price-to-sales ratio at 0.42 compared to the industry median at 0.57, this company has a lower price relative to revenue compared to its peers. This could make Algoma Steel Group Inc’s stock more attractive for value investors.

Algoma Steel Group Inc’s price-earnings ratio is 27.56 compared to the industry median at 11.48. This means it has a higher share price relative to earnings compared to its peers. This could make Algoma Steel Group Inc less attractive for value investors.

Now, let’s assess Algoma Steel Group Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.7, when compared to the industry median of 6.4, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Algoma Steel Group Inc’s shareholder yield is higher than its industry median ratio of 3.23%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Algoma Steel Group Inc’s price-to-book ratio is lower than its industry median ratio of 1.12. This could make Algoma Steel Group Inc more attractive to investors looking for a new addition to their portfolio.

Cleveland-Cliffs Inc’s Value Grade

Value Grade:

Cleveland-Cliffs Inc. is a flat-rolled steel producer in North America. The Company is engaged in manufacturing iron ore pellets. It is vertically integrated from mined raw materials, direct reduced iron and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling, and tubing. It offers advanced high-strength steels (AHSS), hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, hot-rolled coil (HRC), cold-rolled coil, plate, tinplate, grain oriented electrical steel (GOES), non-oriented electrical steel (NOES), stainless steels, tool and die, stamped components, rail, slab and cast ingot. It provides steel solutions, such as operations of tooling and stamping, which provides advanced-engineered solutions, tool design and build, hot and cold-stamped components, and complex assemblies for the automotive market. It serves various markets, such as automotive, infrastructure and manufacturing, steel producers, and distributors and converters.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cleveland-Cliffs Inc has a Value Score of 75, which is considered to be undervalued.

Cleveland-Cliffs Inc’s price-earnings ratio is 25.3 compared to the industry median at 11.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Cleveland-Cliffs Inc less attractive for value investors.

Cleveland-Cliffs Inc’s price-to-book ratio is lower than its peers. This could make Cleveland-Cliffs Inc fairly attractive for value investors when compared to the industry median at 1.12.

You can read more about Cleveland-Cliffs Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Commercial Metals Company’s Value Grade

Value Grade:

Commercial Metals Company is engaged in offering products and technologies for the global construction sector through manufacturing network principally located in the United States and Central Europe. The Company’s solutions support construction across a variety of applications, including infrastructure, non-residential, residential, industrial, and energy generation and transmission. Its segments include North America and Europe. The North America segment provides a diverse offering of products and solutions to support the construction sector composed primarily of a vertically integrated network of recycling facilities, steel mills and fabrication operations. The Company’s 43 scrap metal recycling facilities, primarily located in the southeast and central United States process ferrous and nonferrous scrap metals. The Europe segment is composed primarily of a vertically integrated network of recycling facilities, an EAF mini mill and fabrication operations located in Poland.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Commercial Metals Company has a Value Score of 92, which is considered to be undervalued.

Commercial Metals Company’s price-earnings ratio is 6.1 compared to the industry median at 11.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Commercial Metals Company more attractive for value investors.

Commercial Metals Company’s price-to-book ratio is lower than its peers. This could make Commercial Metals Company more attractive for value investors when compared to the industry median at 1.12.

You can read more about Commercial Metals Company’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Friedman Industries Inc’s Value Grade

Value Grade:

Friedman Industries, Incorporated is a manufacturer and processor of steel products. Its segments include coil products and tubular products. The coil products segment consists of the operation of five hot-rolled coil processing facilities located in Hickman, Arkansas; Decatur, Alabama; East Chicago, Indiana; Granite City, Illinois and Sinton, Texas. The Hickman, East Chicago and Granite City facilities operate temper mills and corrective leveling cut-to length lines. The Sinton and Decatur facilities operate stretcher leveler cut-to-length lines. The tubular products segment consists of the operations in Lone Star where the Company manufactures electric resistance welded pipe and distributes pipe through its Texas Tubular Products division (TTP). TTP operates two electric resistance welded pipe mills with a combined outside diameter (OD) size range of 2 3/8 OD to 8 5/8 OD. Both pipe mills manufacture line pipe and oil country pipe and also manufacture pipe for structural purposes.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Friedman Industries Inc has a Value Score of 94, which is considered to be undervalued.

Friedman Industries Inc’s price-earnings ratio is 4.8 compared to the industry median at 11.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Friedman Industries Inc more attractive for value investors.

Friedman Industries Inc’s price-to-book ratio is higher than its peers. This could make Friedman Industries Inc less attractive for value investors when compared to the industry median at 1.12.

You can read more about Friedman Industries Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Ramaco Resources Inc’s Value Grade

Value Grade:

Ramaco Resources, Inc. is a metallurgical coal company. The Company operates and develops metallurgical coal in southern West Virginia, southwestern Virginia, and southwestern Pennsylvania. The Company?s development portfolio primarily includes four properties: Elk Creek, Berwind, Knox Creek and RAM Mine. The Elk Creek property consists of approximately 20,200 acres of controlled mineral rights and contains approximately 16 seams that it has targeted for production. Its operations include approximately six active mines at its Elk Creek mining complex. The Berwind property consists of approximately 62,500 acres of controlled mineral and is located on the border of West Virginia and Virginia. The Company's Knox Creek facility includes a preparation plant and approximately 74,400 acres of controlled mineral rights. Its RAM Mine property is located in southwestern Pennsylvania, consists of approximately 1,567 acres of controlled mineral rights.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Ramaco Resources Inc has a Value Score of 81, which is considered to be undervalued.

Ramaco Resources Inc’s price-earnings ratio is 10.6 compared to the industry median at 11.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Ramaco Resources Inc more attractive for value investors.

Ramaco Resources Inc’s price-to-book ratio is lower than its peers. This could make Ramaco Resources Inc more attractive for value investors when compared to the industry median at 1.12.

You can read more about Ramaco Resources Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Metals & Mining - Iron & Steel Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Metals & Mining - Iron & Steel stocks as well as other industrys.

Choosing Which of the 5 Best Metals & Mining - Iron & Steel Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Algoma Steel Group Inc stock has a Value Grade of A.
• Cleveland-Cliffs Inc stock has a Value Grade of B.
• Commercial Metals Company stock has a Value Grade of A.
• Friedman Industries Inc stock has a Value Grade of A.
• Ramaco Resources Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 undervalued stocks in the Metals & Mining - Iron & Steel industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Metals & Mining - Iron & Steel Stocks

Want to learn more about Metals & Mining - Iron & Steel stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Monday, November 27
• 6 Undervalued Metals & Mining - Iron & Steel Stocks for Friday, November 24
• 6 Undervalued Metals & Mining - Iron & Steel Stocks for Thursday, November 23
• 7 Undervalued Metals & Mining - Iron & Steel Stocks for Wednesday, November 22

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