Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Metals & Mining 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 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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5 Undervalued Metals & Mining Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Metals & Mining industry for Monday, October 07, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Metals & Mining 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.

Commercial Metals Company’s Value Grade

Value Grade:

Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally. It operates through two segments, North America and Europe. The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers. It also manufactures and sells finished long steel products, including reinforcing bar, merchant bar, light structural, and other special sections, as well as semi-finished billets for rerolling and forging applications. In addition, the company provides fabricated rebar used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams; sells and rents construction-related products and equipment to concrete installers and other businesses; and manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market, and armor plates for military vehicles. Further, it manufactures rebars, merchant bars, and wire rods; and sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction companies. The company was founded in 1915 and is headquartered in Irving, Texas.

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.

Commercial Metals Company has a Value Score of 84, which is considered to be undervalued.

When you look at Commercial Metals Company’s price-to-sales ratio at 0.76 compared to the industry median at 1.98, this company has a lower price relative to revenue compared to its peers. This could make Commercial Metals Company’s stock more attractive for value investors.

Commercial Metals Company’s price-earnings ratio is 11.10 compared to the industry median at 19.50. This means it has a lower share price relative to earnings compared to its peers. This could make Commercial Metals Company more attractive for value investors.

Now, let’s assess Commercial Metals Company’s EV/EBITDA ratio, also known as enterprise multiple. At 6.2, when compared to the industry median of 8.9, 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. Commercial Metals Company’s shareholder yield is higher than its industry median ratio of (1.10%). 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. Commercial Metals Company’s price-to-book ratio is lower than its industry median ratio of 1.64. This could make Commercial Metals Company more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Commercial Metals Company’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Commercial Metals Company’s price-to-free-cash-flow ratio is lower than its industry median ratio of 21.80. This could make Commercial Metals Company more attractive because the lower P/FCF ratio indicates that Commercial Metals Company 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.

Fortitude Gold Corporation’s Value Grade

Value Grade:

Fortitude Gold Corporation, together with its subsidiaries, focuses on exploring gold and silver projects in the United States. The company also explores in copper. It holds 100% of its flagship project, Isabella Pearl Mine, which is an open pit-style consisting of 601 unpatented claims that covers approximately 10,434 acres located in Mineral County, Nevada. The company was incorporated in 2020 and is headquartered in Colorado Springs, Colorado.

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.

Fortitude Gold Corporation has a Value Score of 79, which is considered to be undervalued.

Fortitude Gold Corporation’s price-earnings ratio is 18.2 compared to the industry median at 19.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Fortitude Gold Corporation more attractive for value investors.

Fortitude Gold Corporation’s price-to-book ratio is higher than its peers. This could make Fortitude Gold Corporation less attractive for value investors when compared to the industry median at 1.64.

You can read more about Fortitude Gold Corporation’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.

McEwen Mining Inc.’s Value Grade

Value Grade:

McEwen Mining Inc. engages in the exploration, development, production, and sale of gold and silver deposits in the United States, Canada, Mexico, and Argentina. The company also explores for copper deposits. It holds a 100% interest in the Tonkin property and Gold Bar mine located in Nevada, United States; the Froome mine, the Stock West project, and the Grey Fox, as well as the Fox Complex comprising 118 parcels representing patents and leases and 163 unpatented mining claims totaling 27 square miles in mining rights, and 11 square miles in surface rights located in Ontario, Canada; and the El Gallo Project and Fenix silver-gold project located in Sinaloa, Mexico. The company also holds 47.7% interest in the Los Azules Copper Project located in the province of San Juan, Argentina; and 49% interest in the San José mine located in Santa Cruz, Argentina, as well as interests in the Elder Creek property located in Nevada, United States. In addition, it holds interests in and a portfolio of exploration properties in Nevada, Canada, Mexico, and Argentina. The company was formerly known as US Gold Corporation and changed its name to McEwen Mining Inc. in January 2012. McEwen Mining Inc. was incorporated in 1979 and is headquartered in Toronto, Canada.

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 5.2 compared to the industry median at 19.5. 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 1.64.

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.

Companhia Siderúrgica Nacional’s Value Grade

Value Grade:

Companhia Siderúrgica Nacional operates as an integrated steel producer in Brazil and Latin America. It operates through five segments: Steel Industry, Mining, Logistics, Energy, and Cement. The company offers flat steel products, such as hot and cold rolled, galvanized, galvalume, pre-painted, and metal sheets products; coil, sheets, and derivatives; tiles and derivatives, pipes, and profiles; long steel products; steel packaging solutions for the food industry; chemical packaging solution; and carbochemical products. It also provides steel cutting services; produces and sells cement; operates railway and port facilities; and generates electric power from its thermoelectric co-generation and hydroelectric power plants. In addition, the company explores for iron ore reserves at Casa de Pedra and Engenho mines located in the city of Congonhas; and limestone and dolomite at the Bocaina mine located in the city of Arcos in the state of Minas Gerais, Brazil, as well as produces tin. Companhia Siderúrgica Nacional was founded in 1941 and is headquartered in São Paulo, Brazil.

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 Siderúrgica Nacional has a Value Score of 99, which is considered to be undervalued.

Companhia Siderúrgica Nacional’s price-to-book ratio is higher than its peers. This could make Companhia Siderúrgica Nacional less attractive for value investors when compared to the industry median at 1.64.

You can read more about Companhia Siderúrgica Nacional’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.

Teck Resources Limited’s Value Grade

Value Grade:

Teck Resources Limited engages in exploring for, acquiring, developing, and producing natural resources in Asia, Europe, and North America. The company operates through Steelmaking Coal, Copper, Zinc, and Energy segments. Its principal products include copper, zinc, steelmaking coal, and blended bitumen. The company also produces lead, silver, and molybdenum; and various specialty and other metals, chemicals, and fertilizers. In addition, it explores for gold. The company was formerly known as Teck Cominco Limited and changed its name to Teck Resources Limited in April 2009. The company was founded in 1913 and is headquartered in Vancouver, Canada.

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.

Teck Resources Limited has a Value Score of 69, which is considered to be undervalued.

Teck Resources Limited’s price-earnings ratio is 25.4 compared to the industry median at 19.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Teck Resources Limited less attractive for value investors.

Teck Resources Limited’s price-to-book ratio is higher than its peers. This could make Teck Resources Limited less attractive for value investors when compared to the industry median at 1.64.

You can read more about Teck Resources Limited’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 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 stocks as well as other industrys.

Choosing Which of the 5 Best Metals & Mining 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.

• Commercial Metals Company stock has a Value Grade of A.
• Fortitude Gold Corporation stock has a Value Grade of B.
• McEwen Mining Inc. stock has a Value Grade of B.
• Companhia Siderúrgica Nacional stock has a Value Grade of A.
• Teck Resources Limited stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Metals & Mining 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 Stocks

Want to learn more about Metals & Mining 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.

• 5 Undervalued Metals & Mining Stocks for Monday, October 07
• 4 Undervalued Metals & Mining Stocks for Friday, October 04
• 3 Undervalued Metals & Mining Stocks for Thursday, October 03
• 3 Undervalued Industrial Machinery & Equipment Stocks for Tuesday, October 01

AAII Disclaimer

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