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 Building Products 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 Building Products 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.

Click the button below to learn more about A+ Investor and subscribe today.

4 Undervalued Building Products 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 Building Products 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 Building Products 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.

Caesarstone Ltd.’s Value Grade

Value Grade:

Caesarstone Ltd., together with its subsidiaries, designs, develops, manufactures, and markets engineered stone and other materials under the Caesarstone brand in the United States, Canada, Latin America, Australia, Asia, Europe, the Middle East and Africa, and Israel. The company’s engineered stone slabs are primarily used as indoor and outdoor kitchen countertops in the renovation and remodeling, and residential construction sectors. Its products are also used in other applications, such as vanity tops, wall panels, back splashes, floor tiles, stairs, furniture, and other interior and exterior surfaces that are used in various residential and non-residential applications. The company also offers porcelain products under the Lioli brand for countertops, flooring, and cladding applications; sells natural stone, sinks, and various ancillary fabrication tools and materials; and resells natural stones, as well as various ancillaries, and fabrication and installation accessories, as well as provides fabrication and installation services. It sells its products directly to wholesalers, resellers, and fabricators; and through direct sales force and indirect network of independent distributors. The company was formerly known as Caesarstone Sdot Yam Ltd. and changed its name to Caesarstone Ltd. in June 2016. Caesarstone Ltd. was founded in 1987 and is headquartered in Menashe, Israel.

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.

Caesarstone Ltd. has a Value Score of 75, which is considered to be undervalued.

When you look at Caesarstone Ltd.’s price-to-sales ratio at 0.31 compared to the industry median at 1.90, this company has a lower price relative to revenue compared to its peers. This could make Caesarstone Ltd.’s stock more attractive for value investors.

Now, let’s assess Caesarstone Ltd.’s EV/EBITDA ratio, also known as enterprise multiple. At 42.4, when compared to the industry median of 13.5, 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. Caesarstone Ltd.’s shareholder yield is lower than its industry median ratio of 1.30%. 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. Caesarstone Ltd.’s price-to-book ratio is lower than its industry median ratio of 3.92. This could make Caesarstone Ltd. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Caesarstone Ltd.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Caesarstone Ltd.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.70. This could make Caesarstone Ltd. more attractive because the lower P/FCF ratio indicates that Caesarstone Ltd. 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.

Jewett-Cameron Trading Company Ltd.’s Value Grade

Value Grade:

Jewett-Cameron Trading Company Ltd., through its subsidiaries, engages in the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers, eCommerce providers, on-line direct consumers, and other retailers. The company operates through three segments: Industrial Wood Products; Pet, Fencing and Other; and Seed Processing and Sales. The Industrial Wood Products segment processes and distributes industrial wood products. It offers treated plywood to the transportation industry. The Pet, Fencing and Other segment is involved in the wholesale of pet products, including various enclosures/kennels, beds, bowls, and compostable dog waste bags; fencing and containment products, such as post systems, wood and other fencing infill products, and kitted security fencing solutions; and other products comprising garden, landscaping, and miscellaneous products for the home. The Seed Processing and Sales segment processes and distributes agricultural seeds to distributors, as well as cleaning seeds. The company markets its products under the Lucky Dog, Adjust-A-Gate, Fit-Right, Perimeter Patrol, Lifetime Post, Early Start, Spring Gardner, Greenline, and Weatherguard brands. It also distributes sustainable bag products. It operates in the United States, Canada, Mexico, Latin America, the Caribbean, Europe, and the Asia Pacific. The company was founded in 1953 and is headquartered in North Plains, Oregon.

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.

Jewett-Cameron Trading Company Ltd. has a Value Score of 90, which is considered to be undervalued.

Jewett-Cameron Trading Company Ltd.’s price-earnings ratio is 14.5 compared to the industry median at 22.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Jewett-Cameron Trading Company Ltd. more attractive for value investors.

Jewett-Cameron Trading Company Ltd.’s price-to-book ratio is higher than its peers. This could make Jewett-Cameron Trading Company Ltd. less attractive for value investors when compared to the industry median at 3.92.

You can read more about Jewett-Cameron Trading Company Ltd.’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.

MasterBrand, Inc.’s Value Grade

Value Grade:

MasterBrand, Inc. engages in the manufacture and sale of residential cabinets in the United States and Canada. The company offers a range of residential cabinetry products for the kitchen, bathroom, and other parts of the home. It sells its products to remodeling and new construction markets through dealers, retailers, and builders. The company was formerly known as United Cabinet Incorporated. MasterBrand, Inc. was founded in 1954 and is headquartered in Beachwood, 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.

MasterBrand, Inc. has a Value Score of 77, which is considered to be undervalued.

MasterBrand, Inc.’s price-earnings ratio is 13.0 compared to the industry median at 22.9. This means that it has a lower price relative to its earnings compared to its peers. This makes MasterBrand, Inc. more attractive for value investors.

MasterBrand, Inc.’s price-to-book ratio is higher than its peers. This could make MasterBrand, Inc. less attractive for value investors when compared to the industry median at 3.92.

You can read more about MasterBrand, 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.

Resideo Technologies, Inc.’s Value Grade

Value Grade:

Resideo Technologies, Inc. develops, manufactures, and sells comfort, energy management, and safety and security solutions to the commercial and residential end markets in the United States, Europe, and internationally. The company operates in two segments, Products and Solutions, and ADI Global Distribution. The Products and Solutions segment provides temperature and humidity control, thermal and combustion solutions, water and indoor air quality solutions, energy products and solutions, water and air solutions, smoke and carbon monoxide detection home safety and fire suppression, security panels, sensors, peripherals, wire and cable, communications devices, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software products under the Honeywell Home brand as well as Resideo, Braukmann, First Alert, and BRK brands. The ADI Global Distribution segment engages in the distribution of security, fire, access control, and video products; and participates in the broader related markets of smart home, power, audio, ProAV, networking, communications, data communications, wire and cable, enterprise connectivity, and structured wiring products. The company sells its products and services through a network of professional contractors, distributors, and original equipment manufacturers, as well as retail and online merchants. Resideo Technologies, Inc. was incorporated in 2018 and is headquartered in Scottsdale, Arizona.

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.

Resideo Technologies, Inc. has a Value Score of 84, which is considered to be undervalued.

Resideo Technologies, Inc.’s price-earnings ratio is 16.7 compared to the industry median at 22.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Resideo Technologies, Inc. more attractive for value investors.

Resideo Technologies, Inc.’s price-to-book ratio is higher than its peers. This could make Resideo Technologies, Inc. less attractive for value investors when compared to the industry median at 3.92.

You can read more about Resideo Technologies, 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.

Other Building Products 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 Building Products stocks as well as other industrys.

Choosing Which of the 4 Best Building Products 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.

• Caesarstone Ltd. stock has a Value Grade of B.
• Jewett-Cameron Trading Company Ltd. stock has a Value Grade of A.
• MasterBrand, Inc. stock has a Value Grade of B.
• Resideo Technologies, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Building Products 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 Building Products Stocks

Want to learn more about Building Products 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 Building Products Stocks for Monday, October 07
• 4 Undervalued Building Products Stocks for Friday, October 04
• 3 Undervalued Construction Supplies & Fixtures Stocks for Friday, September 27
• Why A O Smith Corp’s (AOS) Stock Is Up 4.04%

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.