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 Environmental Services & Equipment 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 Environmental Services & Equipment 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 Environmental Services & Equipment 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 Environmental Services & Equipment industry for Tuesday, September 24, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Environmental Services & Equipment 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.

Euro Tech Holdings Company Ltd’s Value Grade

Value Grade:

Euro Tech Holdings Company Limited is a distributor of a range of advanced water treatment equipment, laboratory instruments, analyzers, test kits and related supplies and power generation equipment (including recorders and power quality analyzers). The Company acts as a distributor for manufacturers of such equipment, primarily to commercial customers and governmental agencies or instrumentalities in Hong Kong and the People's Republic of China (PRC). The Company operates two segments: Trading and manufacturing, and Engineering. It distributes analytical re-agents and chemicals to support testing systems of laboratory and portable instruments, process analyzers and portable test kits and assist in the analysis process. It distributes analytical instruments, environmental quality monitoring instruments, sample pre-treatment equipment and general purpose laboratory instruments. It provides systems engineering to waste-water treatment and power generation plants and beverage producers.

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.

Euro Tech Holdings Company Ltd has a Value Score of 68, which is considered to be undervalued.

When you look at Euro Tech Holdings Company Ltd’s price-to-sales ratio at 0.71 compared to the industry median at 1.96, this company has a lower price relative to revenue compared to its peers. This could make Euro Tech Holdings Company Ltd’s stock more attractive for value investors.

Euro Tech Holdings Company Ltd’s price-earnings ratio is 6.93 compared to the industry median at 34.44. This means it has a lower share price relative to earnings compared to its peers. This could make Euro Tech Holdings Company Ltd 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. Euro Tech Holdings Company Ltd’s shareholder yield is lower than its industry median ratio of (0.70%). 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. Euro Tech Holdings Company Ltd’s price-to-book ratio is lower than its industry median ratio of 3.14. This could make Euro Tech Holdings Company Ltd more attractive to investors looking for a new addition to their portfolio.

Fuel Tech Inc’s Value Grade

Value Grade:

Fuel Tech, Inc. is a technology company, which is engaged in the development, commercialization and application of proprietary technologies for air pollution control, process optimization, water treatment and advanced engineering services. It has two segments: Air Pollution Control technology and FUEL CHEM technology. The Air Pollution Control technology segment includes technologies to reduce oxides of nitrogen (NOx) emissions in flue gas generated by the firing of natural gas or coal from boilers, incinerators, furnaces and other stationary combustion sources. These include NOxOUT and HERT Selective Non-Catalytic Reduction (SNCR) systems, and Selective Catalytic Reduction (SCR) systems. The FUEL CHEM technology segment uses chemical processes in combination with advanced computational fluid dynamics and chemical kinetics modeling boiler modeling for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in coal-fired furnaces and boilers.

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.

Fuel Tech Inc has a Value Score of 70, which is considered to be undervalued.

Fuel Tech Inc’s price-to-book ratio is higher than its peers. This could make Fuel Tech Inc less attractive for value investors when compared to the industry median at 3.14.

You can read more about Fuel Tech 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.

Li-Cycle Holdings Corp’s Value Grade

Value Grade:

Li-Cycle Holdings Corp. is a Canada-based global lithium-ion battery resource recovery company and pure-play lithium-ion battery recycler. The Company’s patent-protected Spoke & Hub Technologies provides a solution to recycle all different types of lithium-ion batteries. At its Spokes, or pre-processing facilities, the Company recycles battery manufacturing scrap and end-of-life batteries to produce black mass, a powder-like substance, which contains various valuable metals, including lithium, nickel and cobalt. At its Spokes, lithium-ion batteries of all formats, chemistries and states of charge are processed through a mechanical process, which results materials into two main product lines: battery materials (black mass) and mixed copper/aluminum. At its Hubs, or post-processing facilities, the Company processes black mass to produce critical battery-grade materials, including lithium carbonate, nickel sulfate and cobalt sulfate.

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.

Li-Cycle Holdings Corp has a Value Score of 62, which is considered to be undervalued.

Li-Cycle Holdings Corp’s price-to-book ratio is higher than its peers. This could make Li-Cycle Holdings Corp less attractive for value investors when compared to the industry median at 3.14.

You can read more about Li-Cycle Holdings 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 Environmental Services & Equipment 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 Environmental Services & Equipment stocks as well as other industrys.

Choosing Which of the 3 Best Environmental Services & Equipment 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.

• Euro Tech Holdings Company Ltd stock has a Value Grade of B.
• Fuel Tech Inc stock has a Value Grade of B.
• Li-Cycle Holdings 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 Environmental Services & Equipment 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 Environmental Services & Equipment Stocks

Want to learn more about Environmental Services & Equipment 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 Environmental Services & Equipment Stocks for Tuesday, September 24
• 3 Undervalued Environmental Services & Equipment Stocks for Monday, September 23
• 3 Undervalued Environmental Services & Equipment Stocks for Friday, September 20
• Why Primega Group Holdings Ltd’s (PGHL) Stock Is Up 5.21%

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.