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 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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4 Undervalued Metals & Mining 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 Metals & Mining industry for Wednesday, October 16, 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.

Huadi International Group Co., Ltd.’s Value Grade

Value Grade:

Huadi International Group Co., Ltd. develops, manufactures, markets, and sells industrial stainless steel seamless pipes, tubes, bars, and plates in the People’s Republic of China. It sells auto parts and components. The company’s products are used in thermal, nuclear power plants, automotive, oil and gas, agricultural, industrial equipment, chemical engineering, and electricity sectors. It exports its products to 20 countries, including the United States, Mexico, Thailand, Australia, Argentina, Taiwan, India, the Philippines, the United Arab Emirates, Canada, and internationally. The company was founded in 1998 and is based in Wenzhou, the People’s Republic of China. Huadi International Group Co., Ltd. is a subsidiary of Yongqiang Donghai Limited.

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.

Huadi International Group Co., Ltd. has a Value Score of 83, which is considered to be undervalued.

When you look at Huadi International Group Co., Ltd.’s price-to-sales ratio at 0.37 compared to the industry median at 1.98, this company has a lower price relative to revenue compared to its peers. This could make Huadi International Group Co., Ltd.’s stock more attractive for value investors.

Huadi International Group Co., Ltd.’s price-earnings ratio is 12.00 compared to the industry median at 19.80. This means it has a lower share price relative to earnings compared to its peers. This could make Huadi International Group Co., Ltd. more attractive for value investors.

Now, let’s assess Huadi International Group Co., Ltd.’s EV/EBITDA ratio, also known as enterprise multiple. At 9.1, when compared to the industry median of 8.9, 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. Huadi International Group Co., Ltd.’s shareholder yield is lower than its industry median ratio of (1.05%). 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. Huadi International Group Co., Ltd.’s price-to-book ratio is lower than its industry median ratio of 1.69. This could make Huadi International Group Co., Ltd. more attractive to investors looking for a new addition to their portfolio.

Largo Inc.’s Value Grade

Value Grade:

Largo Inc. engages in the development and sale of vanadium-based energy storage systems in Canada. The company operates through, Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Largo Clean Energy and Largo Physical Vanadium Segments. Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy storage solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021. The company was incorporated in 1988 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.

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

Largo Inc.’s price-to-book ratio is higher than its peers. This could make Largo Inc. less attractive for value investors when compared to the industry median at 1.69.

You can read more about Largo 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 1.69.

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.

Grupo Simec, S.A.B. de C.V.’s Value Grade

Value Grade:

Grupo Simec, S.A.B. de C.V. manufactures, processes, and distributes special bar quality (SBQ) steel and steel alloys products in Mexico, the United States, Brazil, Canada, Latin America, and internationally. The company produces I-beams, channels, structural and commercial angles, hot rolled bars, flat bars, rebars, cold-finished bars, electro-welded wire mesh and mesh panels, and wire rods, as well as semi-finished tube rounds and other semi-finished trade products. Its SBQ products are used across a range of engineered end-user applications, including axles, hubs, and crankshafts for automobiles and light trucks, machine tools, and off-highway equipment; and structural steel products are used in the non-residential construction market and other construction applications. The company also exports its steel products to Central and South America, and Europe. The company was founded in 1934 and is headquartered in Guadalajara, Mexico. Grupo Simec, S.A.B. de C.V. is a subsidiary of Industrias CH, S.A.B. de C.V.

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.

Grupo Simec, S.A.B. de C.V. has a Value Score of 99, which is considered to be undervalued.

Grupo Simec, S.A.B. de C.V.’s price-earnings ratio is 10.5 compared to the industry median at 19.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Grupo Simec, S.A.B. de C.V. more attractive for value investors.

Grupo Simec, S.A.B. de C.V.’s price-to-book ratio is higher than its peers. This could make Grupo Simec, S.A.B. de C.V. less attractive for value investors when compared to the industry median at 1.69.

You can read more about Grupo Simec, S.A.B. de C.V.’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 4 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.

• Huadi International Group Co., Ltd. stock has a Value Grade of A.
• Largo Inc. stock has a Value Grade of A.
• Companhia Siderúrgica Nacional stock has a Value Grade of A.
• Grupo Simec, S.A.B. de C.V. stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Metals & Mining Stocks for Wednesday, October 16
• 7 Undervalued Metals & Mining Stocks for Tuesday, October 15
• 6 Undervalued Metals & Mining Stocks for Monday, October 14
• 6 Undervalued Metals & Mining Stocks for Friday, October 11

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.