Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 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 5 undervalued stocks in the Metals & Mining - Iron & Steel industry for Wednesday, April 10, 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.

Posco Holdings Inc (ADR)’s Value Grade

Value Grade:

Posco Holdings Inc, formerly Posco, is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates its business through four segments. The Steel segment produces and sells steel products such as hot rolled steel, cold rolled steel, stainless steel, among others. The Trading segment engages in the global trade, including the export and import of steel products. The Engineering and Construction (E&C;) segment plans, designs and builds industrial plants, civil engineering projects, commercial and residential buildings. The Other segment is engaged in the power plants, information and communication related services and other businesses.

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.

Posco Holdings Inc (ADR) has a Value Score of 83, which is considered to be undervalued.

When you look at Posco Holdings Inc (ADR)’s price-to-sales ratio at 0.40 compared to the industry median at 0.54, this company has a lower price relative to revenue compared to its peers. This could make Posco Holdings Inc (ADR)’s stock more attractive for value investors.

Posco Holdings Inc (ADR)’s price-earnings ratio is 18.33 compared to the industry median at 14.50. This means it has a higher share price relative to earnings compared to its peers. This could make Posco Holdings Inc (ADR) less attractive for value investors.

Now, let’s assess Posco Holdings Inc (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 8.8, when compared to the industry median of 6.1, the company may be considered overvalued 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. Posco Holdings Inc (ADR)’s shareholder yield is higher than its industry median ratio of 2.13%. 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. Posco Holdings Inc (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.29. This could make Posco Holdings Inc (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Posco Holdings Inc (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Posco Holdings Inc (ADR)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 10.92. This could make Posco Holdings Inc (ADR) less attractive because the higher P/FCF ratio indicates that Posco Holdings Inc (ADR) 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.

Radius Recycling Inc’s Value Grade

Value Grade:

Radius Recycling, Inc., formerly Schnitzer Steel Industries, Inc., is a manufacturer and exporter of recycled metal products. The Company also operates a third-party recycling (3PR) service, which includes materials management, reverse logistics, railcar dismantling, and vehicle recycling services. The Company operates scrap recycling facilities in 25 states, western Canada, and Puerto Rico. It has 54 metals recycling facilities, including seven shredding operations. The Company’s integrated operating platform also includes 50 stores which sell serviceable used auto parts from salvaged vehicles and receive over four million annual retail visits. Its steel manufacturing operations produce finished steel products, including rebar, wire rod, and other specialty products. The Company has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The Company's subsidiaries include Auto Parts Group Southwest, LLC, Edman Corp., 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.

Radius Recycling Inc has a Value Score of 89, which is considered to be undervalued.

Radius Recycling Inc’s price-to-book ratio is higher than its peers. This could make Radius Recycling Inc less attractive for value investors when compared to the industry median at 1.29.

You can read more about Radius Recycling 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.

Ternium SA (ADR)’s Value Grade

Value Grade:

Ternium S.A. is a producer of steel products. The Company produces finished and semi-finished steel products and iron ore, which are sold either directly to steel manufacturers, steel processors or end users. The Company operates through two segments: Steel and Mining. The Steel segment includes the sales of steel products and the Mining segment includes the sales of iron ore products, which are primarily inter-company. The Steel segment comprises three operating segments: Mexico, the Southern Region and Other Markets. In the steel segment, steel products include slabs, billets and round bars (steel in its basic, semi-finished state), hot-rolled coils and sheets, bars and stirrups, wire rods, cold-rolled coils and sheets, tin plate, hot dipped galvanized and electrogalvanized sheets and pre-painted sheets, steel pipes and tubular products, beams, roll-formed products, and other products. In the mining segment, iron ore is sold as concentrates (fines) and pellets.

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.

Ternium SA (ADR) has a Value Score of 96, which is considered to be undervalued.

Ternium SA (ADR)’s price-earnings ratio is 12.8 compared to the industry median at 14.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Ternium SA (ADR) more attractive for value investors.

Ternium SA (ADR)’s price-to-book ratio is higher than its peers. This could make Ternium SA (ADR) less attractive for value investors when compared to the industry median at 1.29.

You can read more about Ternium SA (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.

Vale SA (ADR)’s Value Grade

Value Grade:

Vale SA, formerly Companhia Vale do Rio Doce, is a Brazil-based metal and mining company which is primarily engaged in producing iron ore and nickel. The Company also produces iron ore pellets, copper, platinum group metals (PGMs), gold, silver and cobalt. Vale is engaged in greenfield mineral exploration in five countries and operates logistics systems in Brazil and other regions in the world, including railroads, maritime terminals and ports, which are integrated with mining operations. In addition, Vale has distribution centers to support the delivery of iron ore worldwide. Vale has numerous subsidiaries, including Vale Logistica Uruguay SA, Vale Holdings BV, Vale Overseas Ltd. The Company’s operations abroad cover approximately 30 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.

Vale SA (ADR) has a Value Score of 82, which is considered to be undervalued.

Vale SA (ADR)’s price-earnings ratio is 6.8 compared to the industry median at 14.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Vale SA (ADR) more attractive for value investors.

Vale SA (ADR)’s price-to-book ratio is lower than its peers. This could make Vale SA (ADR) more attractive for value investors when compared to the industry median at 1.29.

You can read more about Vale SA (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.

Olympic Steel Inc’s Value Grade

Value Grade:

Olympic Steel, Inc. is a metals service center company. The Company provides metals processing and distribution services to a range of customers. It operates through three segments: specialty metals flat products, carbon flat products, and tubular and pipe products. Specialty metals flat products segment is engaged in the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products, prime tin mill products and fabricated parts. Carbon flat products segment is engaged in the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. Tubular and pipe products segment distributes metal tubing, pipe, bar, valves and fittings and fabrication of parts supplied to various industrial markets. This segment also offers a range of value-added fabrication services, including tube laser cutting, tube bending, robotic welding, flat laser burning 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.

Olympic Steel Inc has a Value Score of 77, which is considered to be undervalued.

Olympic Steel Inc’s price-earnings ratio is 18.6 compared to the industry median at 14.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Olympic Steel Inc less attractive for value investors.

Olympic Steel Inc’s price-to-book ratio is lower than its peers. This could make Olympic Steel Inc more attractive for value investors when compared to the industry median at 1.29.

You can read more about Olympic Steel 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.

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 5 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.

• Posco Holdings Inc (ADR) stock has a Value Grade of A.
• Radius Recycling Inc stock has a Value Grade of A.
• Ternium SA (ADR) stock has a Value Grade of A.
• Vale SA (ADR) stock has a Value Grade of A.
• Olympic Steel Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Wednesday, April 10
• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Tuesday, April 09
• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Monday, April 08
• Why AZZ Inc’s (AZZ) Stock Is Up 4.21%

AAII Disclaimer

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