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 Metals & Mining - 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 Metals & Mining - 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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3 Undervalued Metals & Mining - Diversified 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 Metals & Mining - Diversified industry for Wednesday, July 24, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Metals & Mining - 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.

BHP Group Ltd (ADR)’s Value Grade

Value Grade:

BHP Group Limited is an Australia-based resources company. The Company is a producer of commodities, including iron ore, copper, nickel, potash and metallurgical (steelmaking) coal. It is focused on offering a range of resources, which provides copper for renewable energy; nickel for electric vehicles; potash for sustainable farming, and iron ore and metallurgical coal for the steel needed for global infrastructure and the energy transition. Its segments include Copper, Iron Ore, and Coal. Its Copper segment is engaged in mining of copper, silver, zinc, molybdenum, uranium, and gold. Its Iron Ore segment is engaged in mining of iron ore. Its Coal segment is engaged in mining of metallurgical coal and energy coal. The Company is also focused on operating Olympic Dam, Prominent Hill, and Carrapateena underground copper-gold mines in South Australia. Its operations are situated in Australia, Europe, China, Japan, India, South Korea, rest of Asia, North America, South America, 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.

BHP Group Ltd (ADR) has a Value Score of 61, which is considered to be undervalued.

When you look at BHP Group Ltd (ADR)’s price-to-sales ratio at 2.52 compared to the industry median at 2.20, this company has a higher price relative to revenue compared to its peers. This could make BHP Group Ltd (ADR)’s stock less attractive for value investors.

BHP Group Ltd (ADR)’s price-earnings ratio is 18.90 compared to the industry median at 36.24. This means it has a lower share price relative to earnings compared to its peers. This could make BHP Group Ltd (ADR) more attractive for value investors.

Now, let’s assess BHP Group Ltd (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 6.2, when compared to the industry median of 9.7, 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. BHP Group Ltd (ADR)’s shareholder yield is higher than its industry median ratio of (4.24%). 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. BHP Group Ltd (ADR)’s price-to-book ratio is higher than its industry median ratio of 1.31. This could make BHP Group Ltd (ADR) less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BHP Group Ltd (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BHP Group Ltd (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 38.95. This could make BHP Group Ltd (ADR) more attractive because the lower P/FCF ratio indicates that BHP Group Ltd (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.

McEwen Mining Inc’s Value Grade

Value Grade:

McEwen Mining Inc. is a gold and silver producer with operations in Nevada, Canada, Mexico and Argentina. In addition, it owns approximately 47.7% of McEwen Copper Inc., which owns the advanced stage Los Azules copper project in Argentina. Its segments include United States, Canada, Mexico, Minera Santa Cruz (MSC) and McEwen Copper. The United States segment comprises the Gold Bar mine and its exploration properties in the State of Nevada. The Canada segment comprises the Fox Complex gold properties, which includes its Froome underground mine; the Grey Fox and Stock West advanced-stage projects; the Stock mill; a number of exploration properties located near the city of Timmins, Ontario, Canada, and the Black Fox mine, which is on care and maintenance. The Mexico segment includes the El Gallo mine and the related advanced-stage Fenix Project, both located in Sinaloa state. The MSC Segment comprises a 49% interest in the San Jose mine, located in Santa Cruz, Argentina.

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.

McEwen Mining Inc has a Value Score of 61, which is considered to be undervalued.

McEwen Mining Inc’s price-earnings ratio is 5.7 compared to the industry median at 36.2. This means that it has a lower price relative to its earnings compared to its peers. This makes McEwen Mining Inc more attractive for value investors.

McEwen Mining Inc’s price-to-book ratio is higher than its peers. This could make McEwen Mining Inc less attractive for value investors when compared to the industry median at 1.31.

You can read more about McEwen Mining 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.

Anglo American plc (ADR)’s Value Grade

Value Grade:

Anglo American PLC is a global mining company with a portfolio of mining and processing operations and undeveloped resources. The Company’s segments include De Beers, Copper, Platinum Group Metals, Iron Ore, Steelmaking Coal, Nickel, Manganese and Crop Nutrient. De Beers is engaged in the diamond business, which markets and sells polished diamonds and diamond jewelry via its retail brands. Its iron ore operations provide customers with high grade iron ore products. In South Africa, it has a 69.7% interest in Kumba Iron Ore and in Brazil, it owns the integrated Minas-Rio operation. Its Steelmaking Coal business includes the Moranbah and Grosvenor (both 88% ownership) steelmaking coal mines, located in Queensland, Australia. In Manganese, it has a 40% interest in the Samancor joint venture and its operations are located in South Africa and Australia. Its Barro Alto and Codemin nickel assets (both 100% owned) are located in Brazil and produce ferronickel.

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.

Anglo American plc (ADR) has a Value Score of 63, which is considered to be undervalued.

Anglo American plc (ADR)’s price-earnings ratio is 123.5 compared to the industry median at 36.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Anglo American plc (ADR) less attractive for value investors.

Anglo American plc (ADR)’s price-to-book ratio is lower than its peers. This could make Anglo American plc (ADR) more attractive for value investors when compared to the industry median at 1.31.

You can read more about Anglo American plc (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 - 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 Metals & Mining - Diversified stocks as well as other industrys.

Choosing Which of the 3 Best Metals & Mining - 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.

• BHP Group Ltd (ADR) stock has a Value Grade of B.
• McEwen Mining Inc stock has a Value Grade of B.
• Anglo American plc (ADR) stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Metals & Mining - 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 Metals & Mining - Diversified Stocks

Want to learn more about Metals & Mining - 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.

• 3 Undervalued Metals & Mining - Diversified Stocks for Wednesday, July 24
• 3 Undervalued Metals & Mining - Diversified Stocks for Tuesday, July 23
• 3 Undervalued Metals & Mining - Diversified Stocks for Friday, July 19
• 4 Undervalued Metals & Mining - Diversified Stocks for Thursday, July 18

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