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 Construction Supplies & Fixtures 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 Construction Supplies & Fixtures 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 Construction Supplies & Fixtures 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 Construction Supplies & Fixtures industry for Friday, May 24, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Construction Supplies & Fixtures 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.

Caesarstone Ltd’s Value Grade

Value Grade:

Caesarstone Ltd. is an Israel-based manufacturer of engineered quartz surfaces. The Company's products consist of engineered quartz, which are installed as countertops in residential kitchens. Its products are primarily used as kitchen countertops in the renovation, remodeling, and residential construction end markets. The other applications of its products include vanity tops, wall panels, backsplashes, floor tiles, stairs, and other interior surfaces that are used in a range of residential and non-residential applications. Its product offerings include over four collections, such as Classico, Concetto, Motivo, and Supernatural, which are marketed as specialty product collections. It sells its products under the Caesarstone brand. Its designs range from fine-grained patterns to coarse-grained color blends with a variegated visual texture. It offers over 70 different colors, with four textures and three thicknesses available for each of the collection's colors.

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.

Caesarstone Ltd has a Value Score of 94, which is considered to be undervalued.

When you look at Caesarstone Ltd’s price-to-sales ratio at 0.38 compared to the industry median at 1.12, this company has a lower price relative to revenue compared to its peers. This could make Caesarstone Ltd’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. Caesarstone Ltd’s shareholder yield is lower than its industry median ratio of 1.53%. 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. Caesarstone Ltd’s price-to-book ratio is lower than its industry median ratio of 2.55. This could make Caesarstone Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Caesarstone Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Caesarstone Ltd’s price-to-free-cash-flow ratio is lower than its industry median ratio of 13.63. This could make Caesarstone Ltd more attractive because the lower P/FCF ratio indicates that Caesarstone Ltd 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.

Dirtt Environmental Solutions Ltd’s Value Grade

Value Grade:

DIRTT Environmental Solutions Ltd. is a Canada-based industrialized construction company. The Company’s system of physical products and digital tools enables organizations. The Company operates in the workplace, healthcare, education and public sector markets. Its proprietary design integration software, ICE, translates the vision of architects and designers into a three-dimensional (3D) model that also acts as manufacturing information. ICE is also licensed to unrelated companies and construction partners of the Company. Its interior solid walls connect to all other products in the DIRTT construction system. DIRTT glass walls can accommodate base building variance and acoustic requirements. Its headwalls are a modular multi-trade healthcare headwall system. Its doors integrate with its solid and glass wall assemblies. A wide range of types and styles supports design with doors that can be specified to support green building initiatives.

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.

Dirtt Environmental Solutions Ltd has a Value Score of 68, which is considered to be undervalued.

Dirtt Environmental Solutions Ltd’s price-to-book ratio is higher than its peers. This could make Dirtt Environmental Solutions Ltd less attractive for value investors when compared to the industry median at 2.55.

You can read more about Dirtt Environmental Solutions Ltd’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.

MasterBrand Inc’s Value Grade

Value Grade:

MasterBrand, Inc. is a manufacturer of residential cabinets in North America and offers a comprehensive portfolio of residential cabinetry products for the kitchen, bathroom and other parts of the home. The Company's products are available in a variety of designs, finishes and styles and span various categories of the cabinets market, such as stock, semi-custom and premium cabinetry. The Company's products are sold throughout the United States and Canada to the remodeling and new construction markets through three primary channels: dealers, retailers and builders. Its retail sales occur in-store and through various e-commerce channels, including its retail channel partners' online presence. The Company partners with regional and large-scale builders for single-family construction throughout North America, serving them directly or through a distribution network, allowing it to customize its service to each builder's requirements. The Company's brands include Mantra, Diamond and Omega.

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.

MasterBrand Inc has a Value Score of 79, which is considered to be undervalued.

MasterBrand Inc’s price-earnings ratio is 11.4 compared to the industry median at 19.3. This means that it has a lower price relative to its earnings compared to its peers. This makes MasterBrand Inc more attractive for value investors.

MasterBrand Inc’s price-to-book ratio is higher than its peers. This could make MasterBrand Inc less attractive for value investors when compared to the industry median at 2.55.

You can read more about MasterBrand 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 Construction Supplies & Fixtures 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 Construction Supplies & Fixtures stocks as well as other industrys.

Choosing Which of the 3 Best Construction Supplies & Fixtures 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.

• Caesarstone Ltd stock has a Value Grade of A.
• Dirtt Environmental Solutions Ltd stock has a Value Grade of B.
• MasterBrand Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Construction Supplies & Fixtures 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 Construction Supplies & Fixtures Stocks

Want to learn more about Construction Supplies & Fixtures 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 Construction Supplies & Fixtures Stocks for Friday, May 24
• Why Caesarstone Ltd’s (CSTE) Stock Is Down 6.27%
• 3 Undervalued Construction Supplies & Fixtures Stocks for Friday, May 17
• 5 Undervalued Construction Supplies & Fixtures Stocks for Thursday, May 16

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.