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 Machinery 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 Machinery 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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4 Undervalued Machinery 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 Machinery industry for Monday, October 14, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Machinery 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.

China Yuchai International Limited’s Value Grade

Value Grade:

China Yuchai International Limited, through its subsidiaries, manufactures, assembles, and sells diesel and natural gas engines for trucks, buses and passenger vehicles, marine, industrial, construction, agriculture, and generator set applications in the People’s Republic of China and internationally. It operates through two segments, Yuchai and HLGE. The Yuchai segment manufactures on- and off-road powertrain solutions and applications. The HLGE is engaged in hospitality and property development activities. The company provides diesel engines comprising 4- and 6-cylinder diesel engines, high horsepower marine diesel engines, and power generator engines; natural gas engines, methanol combustion engines, diesel power generators, diesel engine parts, and remanufacturing services; as well as plug in hybrid engines, range extenders, power generation powertrains, hybrid powertrains, integrated electric drive axel powertrains, and fuel cell systems. It also offers maintenance and retrofitting services. It distributes its engines directly to auto original equipment manufacturers, agents, and retailers. The company was founded in 1951 and is based in Singapore.

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.

China Yuchai International Limited has a Value Score of 99, which is considered to be undervalued.

When you look at China Yuchai International Limited’s price-to-sales ratio at 0.03 compared to the industry median at 1.37, this company has a lower price relative to revenue compared to its peers. This could make China Yuchai International Limited’s stock more attractive for value investors.

China Yuchai International Limited’s price-earnings ratio is 10.40 compared to the industry median at 22.00. This means it has a lower share price relative to earnings compared to its peers. This could make China Yuchai International Limited 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. China Yuchai International Limited’s shareholder yield is higher than its industry median ratio of 0.20%. 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. China Yuchai International Limited’s price-to-book ratio is lower than its industry median ratio of 2.20. This could make China Yuchai International Limited more attractive to investors looking for a new addition to their portfolio.

Desktop Metal, Inc.’s Value Grade

Value Grade:

Desktop Metal, Inc. manufactures and sells additive manufacturing technologies for engineers, designers, and manufacturers in the Americas, Europe, the Middle East, Africa, and the Asia- Pacific. The company offers Shop System, an entry-level metal 3D printing using binder jetting; X-series platform that provides binder jet 3D printing of specialty materials, including metals and ceramics, and tools; and P-Series offers high-speed metal 3D printing. It also provides Einstein series, designed for dental professionals which offers 3D printing; ETEC Xtreme 8K platform, a DLP printer with two 385 nm overhead projectors for high-volume production; ETEC Pro XL for industrial polymer 3D printer; S-Max and S-Max Pro platforms, which provides digital casting solutions; and 3D-Bioplotter platform which offers biofabrication solution. In addition, the company offers binder jetting materials, photopolymer resins, BMD materials, and bioprinting materials. It serves automotive, aerospace, healthcare, consumer products, heavy industry, machine design, research and development, and other industries. Desktop Metal, Inc. was founded in 2015 and is headquartered in Burlington, Massachusetts.

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.

Desktop Metal, Inc. has a Value Score of 64, which is considered to be undervalued.

Desktop Metal, Inc.’s price-to-book ratio is higher than its peers. This could make Desktop Metal, Inc. less attractive for value investors when compared to the industry median at 2.20.

You can read more about Desktop Metal, 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.

Hyzon Motors Inc.’s Value Grade

Value Grade:

Hyzon Motors Inc. supplies hydrogen fuel cell systems for decarbonization applications in various industries. The company commercializes its proprietary fuel cell technology through assembling and upfitting heavy duty (HD) hydrogen fuel cell electric vehicles (FCEVs). It also focuses primarily on assembling and converting hydrogen-powered FCEVs; and building and fostering a clean hydrogen supply ecosystem with partners and third parties from feedstock through hydrogen production, dispensing, and financing. In addition, the company’s technology focuses on designing and manufacturing of MEAs, BPPs, fuel cell stacks, and fuel cell systems for integration into commercial vehicles. Hyzon Motors Inc. was founded in 2020 and is headquartered in Bolingbrook, Illinois.

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.

Hyzon Motors Inc. has a Value Score of 82, which is considered to be undervalued.

Hyzon Motors Inc.’s price-to-book ratio is higher than its peers. This could make Hyzon Motors Inc. less attractive for value investors when compared to the industry median at 2.20.

You can read more about Hyzon Motors 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.

Titan International, Inc.’s Value Grade

Value Grade:

Titan International, Inc., together with its subsidiaries, manufactures and sells wheels, tires, and undercarriage systems and components for off-highway vehicles in the United States and internationally. The company operates in Agricultural, Earthmoving/Construction, and Consumer segments. It offers wheels, tires, and undercarriage systems and components for various agricultural equipment, including tractors, combines, skidders, plows, planters, and irrigation equipment. The company also offers wheels, tires, and undercarriage systems and components for off-the-road earthmoving, mining, military, construction, and forestry equipment, including skid steers, aerial lifts, cranes, graders and levelers, scrapers, self-propelled shovel loaders, articulated dump trucks, load transporters, haul trucks, backhoe loaders, crawler tractors, lattice cranes, shovels, and hydraulic excavators. In addition, it provides bias and light truck tires; and products for ATVs, rock climbers, and turf applications, as well as specialty products and train brakes. It sells its products directly to original equipment manufacturers, as well as to the aftermarket through independent distributors, equipment dealers, and its distribution centers. Titan International, Inc. was founded in 1890 and is headquartered in West Chicago, Illinois.

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.

Titan International, Inc. has a Value Score of 74, which is considered to be undervalued.

Titan International, Inc.’s price-earnings ratio is 17.2 compared to the industry median at 22.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Titan International, Inc. more attractive for value investors.

Titan International, Inc.’s price-to-book ratio is higher than its peers. This could make Titan International, Inc. less attractive for value investors when compared to the industry median at 2.20.

You can read more about Titan International, 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 Machinery 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 Machinery stocks as well as other industrys.

Choosing Which of the 4 Best Machinery 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.

• China Yuchai International Limited stock has a Value Grade of A.
• Desktop Metal, Inc. stock has a Value Grade of B.
• Hyzon Motors Inc. stock has a Value Grade of A.
• Titan International, Inc. stock has a Value Grade of B.

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

Want to learn more about Machinery 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 Machinery Stocks for Monday, October 14
• 6 Undervalued Machinery Stocks for Friday, October 11
• 4 Undervalued Machinery Stocks for Thursday, October 10
• 5 Undervalued Machinery Stocks for Wednesday, October 09

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.