Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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.

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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7 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 7 undervalued stocks in the Metals & Mining - Iron & Steel industry for Wednesday, February 21, 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.

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 93, which is considered to be undervalued.

When you look at Friedman Industries Inc’s price-to-sales ratio at 0.25 compared to the industry median at 0.54, this company has a lower price relative to revenue compared to its peers. This could make Friedman Industries Inc’s stock more attractive for value investors.

Friedman Industries Inc’s price-earnings ratio is 6.80 compared to the industry median at 13.72. This means it has a lower share price relative to earnings compared to its peers. This could make Friedman Industries Inc more attractive for value investors.

Now, let’s assess Friedman Industries Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 5.5, when compared to the industry median of 6.3, 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. Friedman Industries Inc’s shareholder yield is lower than its industry median ratio of 2.27%. 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. Friedman Industries Inc’s price-to-book ratio is lower than its industry median ratio of 1.25. This could make Friedman Industries Inc more attractive to investors looking for a new addition to their portfolio.

Highway Holdings Limited’s Value Grade

Value Grade:

Highway Holdings Limited is a holding company. The Company manufactures and supplies various metal, plastic and electric parts, components and products to its original equipment manufacturing (OEM) clients, which are used by the Company's customers in the manufacturing of products, such as photocopiers, laser printers, compact disc players, laser disc players, computer equipment, electrical components, electrical connectors, vacuum cleaners, light fixtures, electro motors, pumps, automobiles and dishwasher, and other washing machine components. The Company operates in two segments: the metal stamping and mechanical OEM segment, and the electric OEM segment. The metal stamping and mechanical OEM segment focuses on the manufacture and sale of metal parts and components, whereas the electric OEM segment focuses on the manufacture and sale of plastic and electronic parts, components and machines.

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.

Highway Holdings Limited has a Value Score of 74, which is considered to be undervalued.

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

You can read more about Highway Holdings Limited’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.

Reliance Inc’s Value Grade

Value Grade:

Reliance, Inc., formerly Reliance Steel & Aluminum Co., is a diversified metal solutions provider and has a metals service center company in North America. It provides value-added metals processing services and distributes a full line of over 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products. It serves various industries, such as general manufacturing, non-residential construction (including infrastructure), transportation (rail, truck trailer and shipbuilding), aerospace (commercial; military, defense, and space, and heavy industry (agricultural, construction and mining equipment). It also services the auto industry, primarily through its toll processing operation. It has a network of approximately 315 locations in 40 states and in 12 foreign countries, including Belgium, Canada, China, France, India, Malaysia, Mexico, Singapore, South Korea, Turkey, the United Arab Emirates and the United Kingdom.

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.

Reliance Inc has a Value Score of 63, which is considered to be undervalued.

Reliance Inc’s price-earnings ratio is 14.0 compared to the industry median at 13.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Reliance Inc less attractive for value investors.

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

You can read more about Reliance 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.

Sims Ltd (ADR)’s Value Grade

Value Grade:

Sims Limited is engaged in metal recycling and provides circular solutions for technology. The principal activities of the Company include buying, processing, and selling of ferrous and non-ferrous recycled metals, and supporting businesses and data centers in managing end-of-life physical information technology (IT) assets through reuse, redeployment, and recycling. This includes IT asset disposition (ITAD) and e-waste recycling solutions. The Company's North America Metal (NAM), Australia and New Zealand Metal (ANZ) and UK Metal (UK) segments are engaged in ferrous and non-ferrous secondary recycling functions. Its Global Trading segment coordinates sales of ferrous bulk cargo shipments, non-ferrous sales into primarily China and Southeast Asia and brokerage sales on behalf of third and related parties. Its SA Recycling (SAR) segment is engaged in an investment in the SA Recycling joint venture. Its Sims Lifecycle Services (SLS) segment provides electronic recycling solutions.

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.

Sims Ltd (ADR) has a Value Score of 80, which is considered to be undervalued.

Sims Ltd (ADR)’s price-earnings ratio is 14.3 compared to the industry median at 13.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Sims Ltd (ADR) less attractive for value investors.

Sims Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Sims Ltd (ADR) less attractive for value investors when compared to the industry median at 1.25.

You can read more about Sims Ltd (ADR)’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 Dynamics Inc’s Value Grade

Value Grade:

Steel Dynamics, Inc. is a steel producer and metal recycler in the United States. The Company has three segments: steel operations, metals recycling operations and steel fabrication operations. Steel operations segment consists primarily of steelmaking and various coating operations. The segment consists of its EAF steel mills, producing steel from ferrous scrap and scrap substitutes, utilizing continuous casting, automated rolling mills, and various steel coating and processing lines. Metals Recycling operations segment include both ferrous and nonferrous scrap metal processing, transportation, marketing, brokerage and scrap management services, strategically located primarily in close proximity to its steel mills and other end-user scrap consumers, across the United States, and Central and Northern Mexico. Steel fabrication operations segment include seven new millennium building systems plants that primarily serve the nonresidential construction industry across the United States.

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 Dynamics Inc has a Value Score of 85, which is considered to be undervalued.

Steel Dynamics Inc’s price-earnings ratio is 8.4 compared to the industry median at 13.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Steel Dynamics Inc more attractive for value investors.

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

You can read more about Steel Dynamics 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.

SunCoke Energy Inc’s Value Grade

Value Grade:

SunCoke Energy, Inc. is an independent producer of coke. The Company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. The Domestic Coke segment consists of cokemaking facilities and heat recovery operations at Jewell, Indiana Harbor, Haverhill, Granite City, and Middletown plants. Its Brazil segment consists of cokemaking operations located in Vitoria, Brazil, where it operates the ArcelorMittal Brazil cokemaking facility for a Brazilian subsidiary of ArcelorMittal S.A. The Logistics segment consists of Convent Marine Terminal (CMT), Kanawha River Terminal (KRT), Lake Terminal and Dismal River Terminal (DRT). CMT provides loading and unloading services located in Convent, Louisiana. The facility serves coal mining customers as well as other merchant business, including aggregates (crushed stone), petroleum coke and iron ore. KRT is a metallurgical and thermal coal mixing and handling terminal service provider that operates in Ceredo and Belle, West Virginia.

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.

SunCoke Energy Inc has a Value Score of 86, which is considered to be undervalued.

SunCoke Energy Inc’s price-earnings ratio is 15.9 compared to the industry median at 13.7. This means that it has a higher price relative to its earnings compared to its peers. This makes SunCoke Energy Inc less attractive for value investors.

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

You can read more about SunCoke Energy 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.

United States Steel Corporation’s Value Grade

Value Grade:

United States Steel Corporation is a steel producer. The Company operates through four segments: North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment is involved in the production of slabs, strip mill plates, sheets and tin mill products, as well as all iron ore, direct reduced grade pellets, pig iron, and coke production facilities in the United States. The Mini Mill segment produces hot-rolled, cold-rolled, coated sheets and electrical steels. The USSE segment produces and sells slabs, strip mill plate, sheet, tin mill products and spiral welded pipe. The Tubular segment produces and sells rounds, seamless and electric resistance welded (ERW) steel casing and tubing (OCTG), and standard and line pipe and mechanical tubing. It serves the automotive, construction, appliance, energy, container, and packaging industries with high value-added steel products such as its XG3 advanced high-strength steel.

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.

United States Steel Corporation has a Value Score of 88, which is considered to be undervalued.

United States Steel Corporation’s price-earnings ratio is 13.2 compared to the industry median at 13.7. This means that it has a lower price relative to its earnings compared to its peers. This makes United States Steel Corporation more attractive for value investors.

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

You can read more about United States Steel Corporation’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 7 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.

• Friedman Industries Inc stock has a Value Grade of A.
• Highway Holdings Limited stock has a Value Grade of B.
• Reliance Inc stock has a Value Grade of B.
• Sims Ltd (ADR) stock has a Value Grade of B.
• Steel Dynamics Inc stock has a Value Grade of A.
• SunCoke Energy Inc stock has a Value Grade of A.
• United States Steel Corporation stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 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.

• 7 Undervalued Metals & Mining - Iron & Steel Stocks for Wednesday, February 21
• 6 Undervalued Metals & Mining - Iron & Steel Stocks for Tuesday, February 20
• What You Need to Know About Ternium SA (ADR)'s Q4 Earnings
• 7 Undervalued Metals & Mining - Iron & Steel Stocks for Monday, February 19

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