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 Chemicals - Commodity 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 - Commodity 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 Chemicals - Commodity 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 Chemicals - Commodity industry for Friday, March 08, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Chemicals - Commodity 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.

CN ENERGY GROUP Inc’s Value Grade

Value Grade:

CN Energy Group Inc is a China-based holding company mainly produces and supplies wood-based activated carbon. The Company also produces biomass electricity generated in the process of producing activated carbon and provides technical service. The Company's products are primarily used in pharmaceutical manufacturing, industrial manufacturing, water purification, environmental protection, as well as food and beverage production fields.

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.

CN ENERGY GROUP Inc has a Value Score of 78, which is considered to be undervalued.

When you look at CN ENERGY GROUP Inc’s price-to-sales ratio at 0.05 compared to the industry median at 1.02, this company has a lower price relative to revenue compared to its peers. This could make CN ENERGY GROUP Inc’s stock more attractive for value investors.

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. CN ENERGY GROUP Inc’s shareholder yield is lower than its industry median ratio of 0.90%. 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. CN ENERGY GROUP Inc’s price-to-book ratio is lower than its industry median ratio of 2.17. This could make CN ENERGY GROUP Inc more attractive to investors looking for a new addition to their portfolio.

Deswell Industries, Inc.’s Value Grade

Value Grade:

Deswell Industries, Inc. is engaged in the manufacturing and selling of injection-molded plastic parts and components. The Company also provides manufacturing services for electronic products and subassemblies, and manufactures metallic molds and accessory parts for original equipment manufacturers (OEMs) and contract manufacturers. Its segments include plastic injection molding and electronic products assembling. It produces a range of plastic parts and components that are used in the manufacture of consumer and industrial products, using various plastic injection technologies, such as film injection, integrated injection and insert injection. Its products include plastic components of electronic entertainment products; cases for flashlights, telephones, paging machines, projectors and alarm clocks; toner cartridges and cases for photocopy and printer machines; parts for electrical products, such as air-conditioning and ventilators; laser key caps, and automobile components.

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.

Deswell Industries, Inc. has a Value Score of 99, which is considered to be undervalued.

Deswell Industries, Inc.’s price-earnings ratio is 5.6 compared to the industry median at 18.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Deswell Industries, Inc. more attractive for value investors.

Deswell Industries, Inc.’s price-to-book ratio is higher than its peers. This could make Deswell Industries, Inc. less attractive for value investors when compared to the industry median at 2.17.

You can read more about Deswell 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.

Methanex Corp (USA)’s Value Grade

Value Grade:

Methanex Corporation is a Canada-based producer and supplier of methanol to international markets. The Company supplies methanol to international markets in North America, Asia Pacific, Europe, and South America. Its operations consist of the production and sale of methanol, a commodity chemical. It operates production sites in Canada, Chile, Egypt, New Zealand, Trinidad and Tobago and the United States. It has three plants in New Zealand, Motunui 1, Motunui 2 and Waitara Valley. Its two plants in Geismar serve customers in methanol markets. It has two plants in Trinidad, Titan and Atlas that supplies methanol to various methanol markets. Its Chile production site supplies methanol to customers in South America and Asia Pacific, having two plants in Chile, Chile I and Chile IV. Its Egypt plant is located on the Mediterranean Sea and primarily supply methanol to the domestic and European market. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

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.

Methanex Corp (USA) has a Value Score of 77, which is considered to be undervalued.

Methanex Corp (USA)’s price-earnings ratio is 16.6 compared to the industry median at 18.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Methanex Corp (USA) more attractive for value investors.

Methanex Corp (USA)’s price-to-book ratio is higher than its peers. This could make Methanex Corp (USA) less attractive for value investors when compared to the industry median at 2.17.

You can read more about Methanex Corp (USA)’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.

Oil-Dri Corporation of America’s Value Grade

Value Grade:

Oil-Dri Corporation of America develops, mines, manufactures, and markets sorbent products. The Company’s principal products include agricultural and horticultural chemical carriers, animal health and nutrition products, cat litter, fluid purification and filtration bleaching clays, industrial and automotive floor absorbents and sports field products. The Company operates through two segments: Business to Business Products Group and Retail and Wholesale Products Group. The Retail and Wholesale Products Group customers include mass merchandisers, wholesale clubs, drugstore chains, pet specialty retail outlets, dollar stores, retail grocery stores, e-commerce retailers, distributors of industrial cleanup and automotive products, environmental service companies, and others. The Business to Business Products Group customers include processors and refiners of edible oils, petroleum-based oils and biodiesel fuel, manufacturers of animal feed and agricultural chemicals, and others.

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.

Oil-Dri Corporation of America has a Value Score of 88, which is considered to be undervalued.

Oil-Dri Corporation of America’s price-earnings ratio is 19.5 compared to the industry median at 18.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Oil-Dri Corporation of America less attractive for value investors.

Oil-Dri Corporation of America’s price-to-book ratio is higher than its peers. This could make Oil-Dri Corporation of America less attractive for value investors when compared to the industry median at 2.17.

You can read more about Oil-Dri Corporation of America’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 - Commodity 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 - Commodity stocks as well as other industrys.

Choosing Which of the 4 Best Chemicals - Commodity 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.

• CN ENERGY GROUP Inc stock has a Value Grade of B.
• Deswell Industries, Inc. stock has a Value Grade of A.
• Methanex Corp (USA) stock has a Value Grade of B.
• Oil-Dri Corporation of America stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Chemicals - Commodity 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 - Commodity Stocks

Want to learn more about Chemicals - Commodity 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 Chemicals - Commodity Stocks for Friday, March 08
• 3 Undervalued Chemicals - Commodity Stocks for Thursday, March 07
• Why Kronos Worldwide, Inc.’s (KRO) Stock Is Up 16.65%
• 4 Undervalued Chemicals - Commodity Stocks for Wednesday, March 06

AAII Disclaimer

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