Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 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 4 undervalued stocks in the Metals & Mining - Iron & Steel industry for Thursday, February 08, 2024. 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.

Alpha Metallurgical Resources Inc’s Value Grade

Value Grade:

Alpha Metallurgical Resources, Inc. is a mining company with operations across Virginia and West Virginia. The Company is principally engaged in supplying metallurgical products to the steel industry. The Company extracts, processes, and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities. It produces metallurgical (met) coal, which is shipped to domestic and international steel and coke producers. The Company operates in one segment: Met, which consists of approximately six active mines and two preparation plants in Virginia, 17 active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines. The Met segment operations consist of met coal mines, including Deep Mine 41, Road Fork 52, Black Eagle, and Lynn Branch. It conducts mining operations only in the United States, with mines in Central Appalachia (CAPP).

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.

Alpha Metallurgical Resources Inc has a Value Score of 84, which is considered to be undervalued.

When you look at Alpha Metallurgical Resources Inc’s price-to-sales ratio at 1.48 compared to the industry median at 0.54, this company has a higher price relative to revenue compared to its peers. This could make Alpha Metallurgical Resources Inc’s stock less attractive for value investors.

Alpha Metallurgical Resources Inc’s price-earnings ratio is 7.35 compared to the industry median at 12.90. This means it has a lower share price relative to earnings compared to its peers. This could make Alpha Metallurgical Resources Inc more attractive for value investors.

Now, let’s assess Alpha Metallurgical Resources Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.3, 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. Alpha Metallurgical Resources Inc’s shareholder yield is higher than its industry median ratio of 2.19%. 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. Alpha Metallurgical Resources Inc’s price-to-book ratio is higher than its industry median ratio of 1.25. This could make Alpha Metallurgical Resources Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Alpha Metallurgical Resources Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Alpha Metallurgical Resources Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 10.68. This could make Alpha Metallurgical Resources Inc less attractive because the higher P/FCF ratio indicates that Alpha Metallurgical Resources Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Warrior Met Coal Inc’s Value Grade

Value Grade:

Warrior Met Coal, Inc. is a producer and exporter of metallurgical coal for the global steel industry from underground mines located in Brookwood, Alabama, southwest of Birmingham and near Tuscaloosa. These underground coal mines are approximately 1,400 to 2,100 feet underground, making them some of the deepest vertical shaft coal mines in North America. The Company’s operations also extract methane gas from the Blue Creek coal seam. The Company is a producer and exporter of premium met coal, also known as hard coking coal (HCC), operating longwall operations in its underground mines based in Alabama. The HCC that Warrior produces from the Blue Creek, AL, coal seam contains very low sulfur and has strong coking properties.

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.

Warrior Met Coal Inc has a Value Score of 79, which is considered to be undervalued.

Warrior Met Coal Inc’s price-earnings ratio is 6.9 compared to the industry median at 12.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Warrior Met Coal Inc more attractive for value investors.

Warrior Met Coal Inc’s price-to-book ratio is lower than its peers. This could make Warrior Met Coal Inc more attractive for value investors when compared to the industry median at 1.25.

You can read more about Warrior Met Coal 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.

Northwest Pipe Co’s Value Grade

Value Grade:

Northwest Pipe Company is a manufacturer of water-related infrastructure products. The Company operates through two segments: Engineered Steel Pressure Pipe (SPP), and Precast Infrastructure and Engineered Systems (Precast). The SPP segment manufactures large-diameter, high-pressure steel pipeline systems for use in water infrastructure applications, which are primarily related to drinking water systems. These products are also used for hydroelectric power systems, wastewater systems, seismic resiliency, and other applications. The Precast segment manufactures stormwater and wastewater technology products, precast and reinforced concrete products, including manholes, box culverts, vaults, catch basins, pump lift stations, oil water separators, biofiltration, and other environmental and engineered solutions. The Company provides solution-based products for a range of markets under the ParkUSA, Geneva Pipe and Precast, Permalok, and Northwest Pipe Company lines.

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.

Northwest Pipe Co has a Value Score of 66, which is considered to be undervalued.

Northwest Pipe Co’s price-earnings ratio is 12.4 compared to the industry median at 12.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Northwest Pipe Co more attractive for value investors.

Northwest Pipe Co’s price-to-book ratio is higher than its peers. This could make Northwest Pipe Co less attractive for value investors when compared to the industry median at 1.25.

You can read more about Northwest Pipe Co’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.

Steel Partners Holdings LP’s Value Grade

Value Grade:

Steel Partners Holdings L.P. is a diversified global holding company. It owns and operates businesses and has interests in various companies, including diversified industrial products, energy, defense, supply chain management and logistics, banking and youth sports. Its segment includes Diversified Industrial, Energy, Financial Services and Supply Chain. The Diversified Industrial segment manufactures engineered niche industrial products, including joining materials, tubing, building materials, performance materials, electrical products, cutting replacement products and services, and the packaging business. The Energy segment provides drilling and production services to the oil and gas industry and owns a youth sports business. The Supply Chain segment provides supply chain management and logistics services. The Financial Services segment consists primarily of the operations of WebBank, a Utah chartered industrial bank, which engages in a full range of banking activities.

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.

Steel Partners Holdings LP has a Value Score of 99, which is considered to be undervalued.

Steel Partners Holdings LP’s price-earnings ratio is 4.9 compared to the industry median at 12.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Steel Partners Holdings LP more attractive for value investors.

Steel Partners Holdings LP’s price-to-book ratio is higher than its peers. This could make Steel Partners Holdings LP less attractive for value investors when compared to the industry median at 1.25.

You can read more about Steel Partners Holdings LP’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 4 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.

• Alpha Metallurgical Resources Inc stock has a Value Grade of A.
• Warrior Met Coal Inc stock has a Value Grade of B.
• Northwest Pipe Co stock has a Value Grade of B.
• Steel Partners Holdings LP stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Metals & Mining - Iron & Steel Stocks for Thursday, February 08
• 6 Undervalued Metals & Mining - Iron & Steel Stocks for Wednesday, February 07
• Why Commercial Metals Company’s (CMC) Stock Is Up 4.22%
• 7 Undervalued Metals & Mining - Iron & Steel Stocks for Tuesday, February 06

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