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 Friday, October 18, 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.

Ferroglobe PLC’s Value Grade

Value Grade:

Ferroglobe PLC produces and sells silicon metal, and silicon and manganese-based ferroalloys in the United States, Europe, and internationally. It provides silicone chemicals that are used in a range of applications, including personal care items, construction-related products, health care products, and electronics; and silicon metal for primary and secondary aluminum producers. The company also offers silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; and ferromanganese that is used as a deoxidizing, desulphurizing, and degassing agent in the removal of nitrogen and other harmful elements from steel. In addition, it offers ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum; calcium silicon, which is used in the deoxidation and desulfurization of liquid steel, and production of coatings for cast iron pipes, as well as in the welding process of powder metal and in pyrotechnics; and nodularizers and inoculants, which are used in the production of iron. Further, the company provides silica fume, a by-product of the electrometallurgical process of silicon metal and ferrosilicon. Additionally, it operates quartz mines in South Africa, Spain, the United States, and Canada; and low-ash metallurgical coal mines in the United States; and a charcoal production facility in South Africa, as well as holds interests in hydroelectric power plant in France. The company serves silicone chemical producers; aluminum and steel manufacturers; auto companies and their suppliers; ductile iron foundries; manufacturers of photovoltaic solar cells and computer chips; and concrete producers. Ferroglobe PLC was formerly known as VeloNewco Limited and changed its name to Ferroglobe PLC in December 2015. The company was incorporated in 2015 and is headquartered in London, the United Kingdom.

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.

Ferroglobe PLC has a Value Score of 90, which is considered to be undervalued.

When you look at Ferroglobe PLC’s price-to-sales ratio at 0.53 compared to the industry median at 1.95, this company has a lower price relative to revenue compared to its peers. This could make Ferroglobe PLC’s stock more attractive for value investors.

Ferroglobe PLC’s price-earnings ratio is 14.30 compared to the industry median at 20.10. This means it has a lower share price relative to earnings compared to its peers. This could make Ferroglobe PLC more attractive for value investors.

Now, let’s assess Ferroglobe PLC’s EV/EBITDA ratio, also known as enterprise multiple. At 4.0, 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. Ferroglobe PLC’s shareholder yield is higher than its industry median ratio of (1.50%). 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. Ferroglobe PLC’s price-to-book ratio is lower than its industry median ratio of 1.74. This could make Ferroglobe PLC more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Ferroglobe PLC’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Ferroglobe PLC’s price-to-free-cash-flow ratio is lower than its industry median ratio of 22.65. This could make Ferroglobe PLC more attractive because the lower P/FCF ratio indicates that Ferroglobe PLC 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.

Harmony Gold Mining Company Limited’s Value Grade

Value Grade:

Harmony Gold Mining Company Limited engages in the exploration, extraction, and processing of gold. The company explores for uranium, silver, copper, and molybdenum deposits. It has eight underground operations in the Witwatersrand Basin; an open-pit mine on the Kraaipan Greenstone Belt; and various surface source operations in South Africa. In addition, the company owns interests in the Hidden Valley, an open-pit gold and silver mine; and the Wafi-Golpu project located in Morobe Province in Papua New Guinea. Further, it holds interest in Rosby and Eva Copper Project located in Queensland, Australia. Harmony Gold Mining Company Limited was incorporated in 1950 and is headquartered in Randfontein, South Africa.

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.

Harmony Gold Mining Company Limited has a Value Score of 94, which is considered to be undervalued.

Harmony Gold Mining Company Limited’s price-earnings ratio is 15.3 compared to the industry median at 20.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Harmony Gold Mining Company Limited more attractive for value investors.

Harmony Gold Mining Company Limited’s price-to-book ratio is higher than its peers. This could make Harmony Gold Mining Company Limited less attractive for value investors when compared to the industry median at 1.74.

You can read more about Harmony Gold Mining Company 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.

United States Steel Corporation’s Value Grade

Value Grade:

United States Steel Corporation produces and sells flat-rolled and tubular steel products primarily in North America and Europe. The company operates through North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE), and Tubular Products (Tubular) segments. The Flat-Rolled segment offers slabs, strip mill plates, sheets, and tin mill products, as well as iron ore and coke. This segment serves customers in the service center, conversion, transportation, automotive, construction, container, appliance, and electrical markets. The Mini Mill segment provides hot-rolled, cold-rolled, and coated sheets and electrical steel products. This segment serves customers in the automotive, construction, pipe and tube, sheet converter, electrical, solar industrial equipment, and service center markets. The USSE segment provides slabs, strip mill plates, sheets, tin mill products, and spiral welded pipes. This segment serves customers in the construction, container, appliance and electrical, service center, conversion, oil, gas, and petrochemical markets. The Tubular segment offers seamless and electric resistance welded steel casing and tubing products, as well as standard and line pipe and mechanical tubing products primarily to customers in the oil, gas, and petrochemical markets. It also engages in the real estate business. United States Steel Corporation was founded in 1901 and is headquartered in Pittsburgh, Pennsylvania.

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.

United States Steel Corporation has a Value Score of 87, which is considered to be undervalued.

United States Steel Corporation’s price-earnings ratio is 16.6 compared to the industry median at 20.1. This means that it has a lower price relative to its earnings compared to its peers. This makes United States Steel Corporation more attractive for value investors.

United States Steel Corporation’s price-to-book ratio is higher than its peers. This could make United States Steel Corporation less attractive for value investors when compared to the industry median at 1.74.

You can read more about United States Steel 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.

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

Value Grade:

ZK International Group Co., Ltd., through its subsidiaries, engages in the designing, producing, and selling double-press thin-walled stainless steel, carbon steel, and single-press tubes and fittings in the People’s Republic of China. It offers carbon and stainless steel strips; carbon and stainless steel pipes; light gauge stainless steel pipes; pipe connections and fittings; and couplings, unions, adapters, caps, plug pipes, elbows, three-way fittings, tees, cross, side-inlet elbows, wyes, reducers, bushings, pipe fasteners, and pipe flanges. The company also provides stainless steel band, copper strip, welded stainless steel pipes and fittings, valve, light industry machinery and equipment, and other stainless steel products. Its products are used in various applications, including water and gas transmission within urban infrastructural development, residential housing development, food and beverage production, oil and gas exploitation, and agricultural irrigation. The company also exports its products to Europe, Africa, and Southeast Asia. ZK International Group Co., Ltd. was incorporated in 2015 and is headquartered in Wenzhou, the People’s Republic of China.

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.

ZK International Group Co., Ltd. has a Value Score of 78, which is considered to be undervalued.

ZK International Group Co., Ltd.’s price-to-book ratio is higher than its peers. This could make ZK International Group Co., Ltd. less attractive for value investors when compared to the industry median at 1.74.

You can read more about ZK International Group Co., 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.

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.

• Ferroglobe PLC stock has a Value Grade of A.
• Harmony Gold Mining Company Limited stock has a Value Grade of A.
• United States Steel Corporation stock has a Value Grade of A.
• ZK International Group Co., Ltd. stock has a Value Grade of B.

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 Friday, October 18
• 5 Undervalued Metals & Mining Stocks for Thursday, October 17
• 4 Undervalued Metals & Mining Stocks for Wednesday, October 16
• 7 Undervalued Metals & Mining Stocks for Tuesday, October 15

AAII Disclaimer

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