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 - 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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4 Undervalued Chemicals - Diversified 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 - Diversified industry for Monday, March 18, 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.

BASF SE (ADR)’s Value Grade

Value Grade:

BASF SE is a Germany-based chemical company. The Company operates through six segments, which include Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care and Agricultural Solutions. The Chemicals segment consists of the Petrochemicals and Intermediates divisions. The Materials segment consists of Performance Materials and Monomers divisions. The Industrial Solutions segment consists of Dispersions & Pigments and Performance Chemicals divisions. The Surface Technologies segment consists of Catalysts and Coatings divisions. The Nutrition & Care segment consists of Care Chemicals and Nutrition & Health divisions. The Agricultural Solutions segment consists of Agricultural Solutions division, which focuses on provision of crop protection products and seeds.

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.

BASF SE (ADR) has a Value Score of 66, which is considered to be undervalued.

When you look at BASF SE (ADR)’s price-to-sales ratio at 0.64 compared to the industry median at 0.97, this company has a lower price relative to revenue compared to its peers. This could make BASF SE (ADR)’s stock more attractive for value investors.

BASF SE (ADR)’s price-earnings ratio is 196.72 compared to the industry median at 26.71. This means it has a higher share price relative to earnings compared to its peers. This could make BASF SE (ADR) less attractive for value investors.

Now, let’s assess BASF SE (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 6.6, 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. BASF SE (ADR)’s shareholder yield is higher than its industry median ratio of 7.31%. 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. BASF SE (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.51. This could make BASF SE (ADR) more attractive to investors looking for a new addition to their portfolio.

Ecovyst Inc’s Value Grade

Value Grade:

Ecovyst Inc. is an integrated global provider of advanced materials, specialty catalysts and services. The Company’s Ecoservices segment provides sulfuric acid recycling to the North American refining industry for the production of alkylate and provides virgin sulfuric acid for industrial and mining applications. The Ecoservices segment also provides chemical waste handling and treatment services, as well as ex-situ catalyst activation services for the refining and petrochemical industry. Its Advanced Materials & Catalysts segment provides finished silica catalysts, catalyst supports and functionalized silicas necessary to produce high performing plastics and to enable sustainable chemistry, and through its Zeolyst International and Zeolyst C.V. (Zeolyst Joint Venture), supplies specialty zeolites used in catalysts that support the production of sustainable fuels, remove nitrogen oxides from diesel engine emissions, and that are broadly applied in refining and petrochemical processes.

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.

Ecovyst Inc has a Value Score of 65, which is considered to be undervalued.

Ecovyst Inc’s price-earnings ratio is 15.2 compared to the industry median at 26.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Ecovyst Inc more attractive for value investors.

Ecovyst Inc’s price-to-book ratio is lower than its peers. This could make Ecovyst Inc fairly attractive for value investors when compared to the industry median at 1.51.

You can read more about Ecovyst 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.

Huntsman Corporation’s Value Grade

Value Grade:

Huntsman Corporation is a manufacturer of diversified organic chemical products. The Company operates through three segments: Polyurethanes, Performance Products and Advanced Materials. Polyurethanes product segment includes methylene diphenyl diisocyanate, polyols, thermoplastic polyurethane products. Performance Products segment engaged in manufacturing and sale of amines and maleic anhydride and serves a wide variety of consumer and industrial end markets. Its Advanced Materials segment includes technologically advanced epoxy, phenoxy, acrylic, polyurethane, mercaptan and acrylonitrile butadiene-based polymer products as well as carbon nanomaterials. Its products comprise different chemicals and chemical formulations, which it markets globally to a wide range of consumers that consist primarily of industrial and building product manufacturers. The Company’s products are used adhesives, aerospace, automotive, coatings and construction, construction products, durable and non-durable.

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.

Huntsman Corporation has a Value Score of 75, which is considered to be undervalued.

Huntsman Corporation’s price-to-book ratio is higher than its peers. This could make Huntsman Corporation less attractive for value investors when compared to the industry median at 1.51.

You can read more about Huntsman 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.

Sasol Ltd (ADR)’s Value Grade

Value Grade:

Sasol Limited is a global chemical and energy company. The Company’s segments include Advanced Materials, Base Chemicals, Essential Care Chemicals and Performance Solutions. Its Advanced Materials segment manufactures specialty alumina, carbon and cobalt catalysts. Its Base Chemicals segment offers materials including the basic building blocks for products such as agriculture film, pipes, woven fabric, sunscreens, fertilizer, vitamin production and others. Its Essential Care Chemicals segment focuses on three markets: fabric and home care/industrial and institutional cleaning; personal care/health and wellness, and technical formulations to support industrial applications. It produces a variety of surfactants, surfactant intermediates, fatty alcohols and linear alkyl benzene. Its Performance Solutions segment offers solvents, synthetic waxes, comonomers and specialty chemicals.

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.

Sasol Ltd (ADR) has a Value Score of 87, which is considered to be undervalued.

Sasol Ltd (ADR)’s price-earnings ratio is 31.6 compared to the industry median at 26.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Sasol Ltd (ADR) less attractive for value investors.

Sasol Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Sasol Ltd (ADR) less attractive for value investors when compared to the industry median at 1.51.

You can read more about Sasol 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.

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 4 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.

• BASF SE (ADR) stock has a Value Grade of B.
• Ecovyst Inc stock has a Value Grade of B.
• Huntsman Corporation stock has a Value Grade of B.
• Sasol Ltd (ADR) 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 - 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.

• 4 Undervalued Chemicals - Diversified Stocks for Monday, March 18
• 3 Undervalued Chemicals - Diversified Stocks for Friday, March 15
• Why LSB Industries Inc’s (LXU) Stock Is Up 4.75%
• Why Ingevity Corp’s (NGVT) Stock Is Down 4.54%

AAII Disclaimer

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