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 - Aluminum 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 - Aluminum 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 - Aluminum 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 - Aluminum industry for Thursday, September 05, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Metals & Mining - Aluminum 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.

Constellium SE’s Value Grade

Value Grade:

Constellium SE is a France-based company which provides development and manufacturing of aluminum products and solutions. The Company designs and manufactures advanced alloys and engineered solutions for applications, such as cars, beverage cans, airplanes and more. It designs, develops, and engineers products and solutions in partnership with customers for an array of markets which includes Automotive, Aerospace, Packaging, Defense, Transportation, and Industry. The Company operates its business through approximately 28 manufacturing sites in Europe, North America, and China with 12,000 employees around the world.

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.

Constellium SE has a Value Score of 75, which is considered to be undervalued.

When you look at Constellium SE’s price-to-sales ratio at 0.31 compared to the industry median at 0.45, this company has a lower price relative to revenue compared to its peers. This could make Constellium SE’s stock more attractive for value investors.

Constellium SE’s price-earnings ratio is 13.36 compared to the industry median at 20.48. This means it has a lower share price relative to earnings compared to its peers. This could make Constellium SE more attractive for value investors.

Now, let’s assess Constellium SE’s EV/EBITDA ratio, also known as enterprise multiple. At 6.8, when compared to the industry median of 9.3, 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. Constellium SE’s shareholder yield is the same than its industry median ratio of 0.19%. 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. Constellium SE’s price-to-book ratio is higher than its industry median ratio of 1.54. This could make Constellium SE less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Constellium SE’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Constellium SE’s price-to-free-cash-flow ratio is lower than its industry median ratio of 16.20. This could make Constellium SE more attractive because the lower P/FCF ratio indicates that Constellium SE 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.

Kaiser Aluminum Corp.’s Value Grade

Value Grade:

Kaiser Aluminum Corporation is a producer of semi-fabricated specialty aluminum products. The Company's fabricated aluminum mill products include flat-rolled (plate, sheet, and coil), extruded (rod, bar, hollows, and shapes), drawn (rod, bar, pipe, tube and wire) and certain cast aluminum products. Its business focuses on producing rolled, extruded, and drawn aluminum products used principally for aerospace and defense, aluminum beverage and food packaging, general engineering that include consumer durables, electronics and products for electrical and machinery and equipment applications and automotive products. It provides its products for a range of market applications, including aerospace and high strength (Aero/HS products); beverage and food packaging products (Packaging); general engineering (GE products); automotive (Automotive Extrusions), and other products. Its Automotive Extrusions consist of extruded aluminum products for many North American automotive applications.

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.

Kaiser Aluminum Corp. has a Value Score of 62, which is considered to be undervalued.

Kaiser Aluminum Corp.’s price-earnings ratio is 27.6 compared to the industry median at 20.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Kaiser Aluminum Corp. less attractive for value investors.

Kaiser Aluminum Corp.’s price-to-book ratio is lower than its peers. This could make Kaiser Aluminum Corp. more attractive for value investors when compared to the industry median at 1.54.

You can read more about Kaiser Aluminum Corp.’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.

Tredegar Corp’s Value Grade

Value Grade:

Tredegar Corporation is engaged, through its subsidiaries, in the manufacture of aluminum extrusions, polyethylene (PE) plastic films and polyester (PET) films. Its segments include Aluminum Extrusions, PE Films and Flexible Packaging Films. The Aluminum Extrusions segment, also referred to as Bonnell Aluminum, produces soft and medium strength alloyed aluminum extrusions, custom fabricated and finished, for the building and construction, automotive and transportation, consumer durables goods, machinery and equipment, electrical and renewable energy, and distribution markets. PE Films segment produces surface protection films, polyethylene overwrap films and films for other markets. Flexible Packaging Films segment produces polyester based films for use in packaging applications that have specialized properties, such as heat resistance, strength, barrier protection and the ability to accept print graphics. It operates manufacturing facilities in North America, South America, and Asia.

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.

Tredegar Corp has a Value Score of 74, which is considered to be undervalued.

Tredegar Corp’s price-to-book ratio is higher than its peers. This could make Tredegar Corp less attractive for value investors when compared to the industry median at 1.54.

You can read more about Tredegar Corp’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 - Aluminum 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 - Aluminum stocks as well as other industrys.

Choosing Which of the 3 Best Metals & Mining - Aluminum 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.

• Constellium SE stock has a Value Grade of B.
• Kaiser Aluminum Corp. stock has a Value Grade of B.
• Tredegar Corp 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 - Aluminum 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 - Aluminum Stocks

Want to learn more about Metals & Mining - Aluminum 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 - Aluminum Stocks for Thursday, September 05
• Why Alcoa Corp’s (AA) Stock Is Down 5.86%
• Why Century Aluminum Co’s (CENX) Stock Is Down 9.19%
• Why Kaiser Aluminum Corp.’s (KALU) Stock Is Down 5.58%

AAII Disclaimer

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