Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 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 6 undervalued stocks in the Metals & Mining - Iron & Steel industry for Monday, April 15, 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.

Commercial Metals Company’s Value Grade

Value Grade:

Commercial Metals Company is engaged in offering products and technologies for the global construction sector through manufacturing network principally located in the United States and Central Europe. The Company’s solutions support construction across a variety of applications, including infrastructure, non-residential, residential, industrial, and energy generation and transmission. Its segments include North America and Europe. The North America segment provides a diverse offering of products and solutions to support the construction sector composed primarily of a vertically integrated network of recycling facilities, steel mills and fabrication operations. The Company’s 43 scrap metal recycling facilities, primarily located in the southeast and central United States process ferrous and nonferrous scrap metals. The Europe segment is composed primarily of a vertically integrated network of recycling facilities, an EAF mini mill and fabrication operations located in Poland.

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.

Commercial Metals Company has a Value Score of 82, which is considered to be undervalued.

When you look at Commercial Metals Company’s price-to-sales ratio at 0.76 compared to the industry median at 0.53, this company has a higher price relative to revenue compared to its peers. This could make Commercial Metals Company’s stock less attractive for value investors.

Commercial Metals Company’s price-earnings ratio is 9.59 compared to the industry median at 14.40. This means it has a lower share price relative to earnings compared to its peers. This could make Commercial Metals Company more attractive for value investors.

Now, let’s assess Commercial Metals Company’s EV/EBITDA ratio, also known as enterprise multiple. At 5.7, when compared to the industry median of 6.1, 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. Commercial Metals Company’s shareholder yield is lower than its industry median ratio of 2.17%. 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. Commercial Metals Company’s price-to-book ratio is higher than its industry median ratio of 1.23. This could make Commercial Metals Company less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Commercial Metals Company’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Commercial Metals Company’s price-to-free-cash-flow ratio is higher than its industry median ratio of 11.04. This could make Commercial Metals Company less attractive because the higher P/FCF ratio indicates that Commercial Metals Company 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.

Kumba Iron Ore Ltd - ADR’s Value Grade

Value Grade:

Kumba Iron Ore Limited is a supplier of iron ore to the global steel industry. The Company is engaged in exploration, extraction, beneficiation, marketing, sale and shipping of iron ore. It produces iron ore at Sishen and Kolomela mines in the Northern Cape province. The Company's segments include Sishen mine, Kolomela mine, Logistics and Shipping operations and Others. It operates primarily in South Africa, with mining operations in the Northern Cape province and a port operation in Saldanha Bay, Western Cape. It has a 75.37% interest in Sishen Iron Ore Company Proprietary Limited (SIOC). Its Sishen mine is near the town of Kathu in the Northern Cape Province. Its Kolomela mine is near Postmasburg in the Northern Cape Province. Its logistics processes and infrastructure serve as the link between its operations and its clients. Its Northern Cape operations are serviced by a dedicated iron ore rail link. Its product range includes hematite (Fe2O3) and magnetite (Fe3O4).

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.

Kumba Iron Ore Ltd - ADR has a Value Score of 63, which is considered to be undervalued.

Kumba Iron Ore Ltd - ADR’s price-earnings ratio is 6.8 compared to the industry median at 14.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Kumba Iron Ore Ltd - ADR more attractive for value investors.

Kumba Iron Ore Ltd - ADR’s price-to-book ratio is lower than its peers. This could make Kumba Iron Ore Ltd - ADR more attractive for value investors when compared to the industry median at 1.23.

You can read more about Kumba Iron Ore 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.

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 84, which is considered to be undervalued.

Posco Holdings Inc (ADR)’s price-earnings ratio is 17.2 compared to the industry median at 14.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Posco Holdings Inc (ADR) less attractive for value investors.

Posco Holdings Inc (ADR)’s price-to-book ratio is higher than its peers. This could make Posco Holdings Inc (ADR) less attractive for value investors when compared to the industry median at 1.23.

You can read more about Posco Holdings Inc (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.

Plaintree Systems Inc. (USA)’s Value Grade

Value Grade:

Plaintree Systems Inc. is a Canada-based diversified company with technologies and manufacturing capabilities in structural design and aerospace. Its segments include Applied Electronics and Specialty Structures. The Applied Electronics division includes Hypernetics, Summit Aerospace USA Inc. and Elmira Stove Works Inc. businesses. The Applied Electronics segment is a manufacturer of avionic components for various applications, including aircraft antiskid braking, aircraft instrument indicators, solenoids, high purity valves and permanent magnet alternators. The Specialty Structures segment is engaged in designing/building and manufacturing of steel, aluminum and stainless-steel specialty structures, such as commercial domes, foundations for unstable soil conditions and flood zones, for free form structures, barrel vaults, space frames and industrial dome coverings, and Spotton Corporation, a design and manufacturer of high-end custom hydraulic and pneumatic valves and cylinders.

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.

Plaintree Systems Inc. (USA) has a Value Score of 82, which is considered to be undervalued.

Plaintree Systems Inc. (USA)’s price-to-book ratio is lower than its peers. This could make Plaintree Systems Inc. (USA) more attractive for value investors when compared to the industry median at 1.23.

You can read more about Plaintree Systems Inc. (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.

Steel Dynamics Inc’s Value Grade

Value Grade:

Steel Dynamics, Inc. is a steel producer and metal recycler in the North America. Its segments include Steel Operations, Metals Recycling Operations, Steel Fabrication Operations and Aluminum Operations. Steel Operations segment consists primarily of steelmaking and various coating operations. 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. The Aluminum Operations includes the recycled aluminum flat rolled products mill being constructed in Columbus, Mississippi, and two satellite recycled aluminum slab centers in Arizona and Mexico.

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 76, which is considered to be undervalued.

Steel Dynamics Inc’s price-earnings ratio is 9.6 compared to the industry median at 14.4. 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 1.23.

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.

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 12.4 compared to the industry median at 14.4. 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 1.23.

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.

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 6 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.

• Commercial Metals Company stock has a Value Grade of A.
• Kumba Iron Ore Ltd - ADR stock has a Value Grade of B.
• Posco Holdings Inc (ADR) stock has a Value Grade of A.
• Plaintree Systems Inc. (USA) stock has a Value Grade of A.
• Steel Dynamics Inc stock has a Value Grade of B.
• Ternium SA (ADR) stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Metals & Mining - Iron & Steel Stocks for Monday, April 15
• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Friday, April 12
• Why Algoma Steel Group Inc’s (ASTL) Stock Is Down 4.21%
• Why Posco Holdings Inc (ADR)’s (PKX) Stock Is Down 4.52%

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