Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Chemicals - Diversified 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 Chemicals - Diversified 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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3 Undervalued Chemicals - Diversified Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Chemicals - Diversified industry for Wednesday, March 06, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Chemicals - Diversified 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.

Chemours Co’s Value Grade

Value Grade:

The Chemours Company is a provider of performance chemicals, which is engaged in providing customized solutions with a range of industrial and specialty chemicals products for markets. Its segments include Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials. Titanium Technologies segment is a provider of titanium dioxide pigment, a premium white pigment used to deliver whiteness, brightness, opacity, and protection in various applications. The Thermal & Specialized Solutions segment is a provider of refrigerants, thermal management solutions, propellants, blowing agents, and specialty solvents. The Advanced Performance Materials segment is a provider of high-end polymers and advanced materials. The Company operates in approximately 29 production facilities located in over nine countries and serves approximately 2,900 customers across a range of end markets in approximately 120 countries.

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.

Chemours Co has a Value Score of 78, which is considered to be undervalued.

When you look at Chemours Co’s price-to-sales ratio at 0.51 compared to the industry median at 0.97, this company has a lower price relative to revenue compared to its peers. This could make Chemours Co’s stock more attractive for value investors.

Now, let’s assess Chemours Co’s EV/EBITDA ratio, also known as enterprise multiple. At 5.9, when compared to the industry median of 9.9, 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. Chemours Co’s shareholder yield is higher than its industry median ratio of 7.49%. 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. Chemours Co’s price-to-book ratio is higher than its industry median ratio of 1.49. This could make Chemours Co less attractive to investors looking for a new addition to their portfolio.

LSB Industries Inc’s Value Grade

Value Grade:

LSB Industries, Inc. is primarily engaged in the manufacturing and marketing of chemical products for the agricultural, industrial and mining markets. The Company manufactures products for three principal markets: agricultural, industrial and mining. Its agricultural products include ammonia, fertilizer-grade ammonium nitrate (AN), high-density ammonium nitrate (HDAN) and urea ammonia nitrate (UAN). Its industrial products include high-purity and commercial-grade ammonia, high-purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, carbon dioxide, and diesel exhaust fluid (DEF). Its mining products include industrial-grade AN (LDAN) and AN solutions. It owns and operates three multi-plant facilities in El Dorado, Arkansas, Cherokee, Alabama, and Pryor, Oklahoma. Its products are sold through distributors and directly to end customers throughout the United States and parts of Mexico, Canada and the Caribbean.

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.

LSB Industries Inc has a Value Score of 97, which is considered to be undervalued.

LSB Industries Inc’s price-earnings ratio is 5.6 compared to the industry median at 26.4. This means that it has a lower price relative to its earnings compared to its peers. This makes LSB Industries Inc more attractive for value investors.

LSB Industries Inc’s price-to-book ratio is higher than its peers. This could make LSB Industries Inc less attractive for value investors when compared to the industry median at 1.49.

You can read more about LSB 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.

Ingevity Corp’s Value Grade

Value Grade:

Ingevity Corporation is engaged in developing, marketing, and bringing to market solutions that are renewably sourced. The Company operates through three segments: Performance Materials, Performance Chemicals, and Advanced Polymer Technologies. Performance Materials segment engineers, manufactures, and sells hardwood-based, chemically activated carbon products, which are produced through a technical and specialized process primarily for use in gasoline vapor emission control systems in cars, trucks, motorcycles, and boats. Performance Chemicals segment is comprised of two product lines: road technologies and industrial specialties. Its products are utilized in pavement construction, preservation, reconstruction and recycling, agrochemical dispersants, paper chemicals and other diverse industrial uses. Advanced Polymer Technologies segment produces caprolactone and caprolactone-based specialty polymers for use in coatings, resins, elastomers, adhesives, bioplastics, and medical devices.

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.

Ingevity Corp has a Value Score of 61, which is considered to be undervalued.

Ingevity Corp’s price-to-book ratio is lower than its peers. This could make Ingevity Corp more attractive for value investors when compared to the industry median at 1.49.

You can read more about Ingevity Corp’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 Chemicals - Diversified 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 Chemicals - Diversified stocks as well as other industrys.

Choosing Which of the 3 Best Chemicals - Diversified 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.

• Chemours Co stock has a Value Grade of B.
• LSB Industries Inc stock has a Value Grade of A.
• Ingevity Corp stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Chemicals - Diversified 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 Chemicals - Diversified Stocks

Want to learn more about Chemicals - Diversified 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.

• 3 Undervalued Chemicals - Diversified Stocks for Wednesday, March 06
• What You Need to Know About LSB Industries Inc's Q4 Earnings
• Why Chemours Co’s (CC) Stock Is Up 5.64%
• Why Ecovyst Inc’s (ECVT) Stock Is Down 5.49%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.