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 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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4 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 4 undervalued stocks in the Metals & Mining - Iron & Steel industry for Wednesday, May 29, 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.

Cleveland-Cliffs Inc’s Value Grade

Value Grade:

Cleveland-Cliffs Inc. is a flat-rolled steel producer and engaged in manufacturing iron ore pellets in North America. The Company is vertically integrated from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling, and tubing. It offers advanced high-strength steels (AHSS), hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, hot-rolled coil (HRC), cold-rolled coil, plate, tinplate, grain oriented electrical steel (GOES), non-oriented electrical steel (NOES), stainless steels, tool and die, stamped components, rail, slab and cast ingot. Its tubular components and tooling and stamping segments provide carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot and cold stamped steel components and complex assemblies. It serves various markets, such as automotive, infrastructure and manufacturing, steel producers, and distributors and converters.

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.

Cleveland-Cliffs Inc has a Value Score of 85, which is considered to be undervalued.

When you look at Cleveland-Cliffs Inc’s price-to-sales ratio at 0.38 compared to the industry median at 0.62, this company has a lower price relative to revenue compared to its peers. This could make Cleveland-Cliffs Inc’s stock more attractive for value investors.

Cleveland-Cliffs Inc’s price-earnings ratio is 22.58 compared to the industry median at 14.08. This means it has a higher share price relative to earnings compared to its peers. This could make Cleveland-Cliffs Inc less attractive for value investors.

Now, let’s assess Cleveland-Cliffs Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 7.9, when compared to the industry median of 7.3, 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. Cleveland-Cliffs Inc’s shareholder yield is higher than its industry median ratio of 1.75%. 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. Cleveland-Cliffs Inc’s price-to-book ratio is lower than its industry median ratio of 1.19. This could make Cleveland-Cliffs Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Cleveland-Cliffs Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Cleveland-Cliffs Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 14.96. This could make Cleveland-Cliffs Inc more attractive because the lower P/FCF ratio indicates that Cleveland-Cliffs Inc 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 61, which is considered to be undervalued.

Kumba Iron Ore Ltd - ADR’s price-earnings ratio is 7.4 compared to the industry median at 14.1. 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 1.19.

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.

Metallus Inc’s Value Grade

Value Grade:

Metallus Inc., formerly TimkenSteel Corporation, manufactures alloy steel, as well as carbon and micro-alloy steel using electric arc furnace (EAF) technology. The Company's portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing (tubes), manufactured components, such as precision steel components, and billets. The Company manages raw material recycling programs, which are used internally as a feeder system for its melt operations and allow it to sell scrap not used in its operations to third parties. The Company's products and solutions are used in a range of demanding applications in various market sectors, including automotive; oil and gas; industrial equipment; mining; construction; rail; defense; heavy truck; agriculture, and power generation. Its production of manufactured components takes place at two downstream manufacturing facilities: Tryon Peak (Columbus, North Carolina) and St. Clair (Eaton, Ohio).

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.

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

Metallus Inc’s price-earnings ratio is 14.1 compared to the industry median at 14.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Metallus Inc fairly attractive for value investors.

Metallus Inc’s price-to-book ratio is lower than its peers. This could make Metallus Inc more attractive for value investors when compared to the industry median at 1.19.

You can read more about Metallus 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.

Companhia Siderurgica Nacional SA (ADR)’s Value Grade

Value Grade:

Companhia Siderurgica Nacional is a Brazil-based company engaged in the steel industry. The Company operates throughout the entire steel production chain, from the mining of iron ore to the production and sale of a range of steel products, including coated galvanized flat steel and tinplate. The Company operates in five segments: Steel, Mining, Cement, Logistics and Energy. The Steel segment focuses on the production, distribution and sale of flat steel, long steel, metallic containers, and galvanized steel, with operations in Brazil, the United States, Portugal, and Germany. The Mining segment encompasses the activities of iron ore and tin mining. The Cement segment is responsible for the cement production, distribution, and sale operations. The logistics segment manages port terminal for containers, as well as railway networks. The Energy segment includes generation of electric power. The Company is controlled by Vicunha Acos SA.

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.

Companhia Siderurgica Nacional SA (ADR) has a Value Score of 73, which is considered to be undervalued.

Companhia Siderurgica Nacional SA (ADR)’s price-earnings ratio is 955.6 compared to the industry median at 14.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Companhia Siderurgica Nacional SA (ADR) less attractive for value investors.

Companhia Siderurgica Nacional SA (ADR)’s price-to-book ratio is higher than its peers. This could make Companhia Siderurgica Nacional SA (ADR) less attractive for value investors when compared to the industry median at 1.19.

You can read more about Companhia Siderurgica Nacional 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 4 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.

• Cleveland-Cliffs Inc stock has a Value Grade of A.
• Kumba Iron Ore Ltd - ADR stock has a Value Grade of B.
• Metallus Inc stock has a Value Grade of B.
• Companhia Siderurgica Nacional SA (ADR) stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Metals & Mining - Iron & Steel Stocks for Wednesday, May 29
• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Tuesday, May 28
• Why Universal Stainless & Alloy Products Inc’s (USAP) Stock Is Up 7.12%
• 5 Undervalued Metals & Mining - Iron & Steel Stocks for Monday, May 27

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