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 Trading Companies & Distributors 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 Trading Companies & Distributors 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 Trading Companies & Distributors 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 Trading Companies & Distributors industry for Tuesday, October 29, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Trading Companies & Distributors 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.

BlueLinx Holdings Inc.’s Value Grade

Value Grade:

BlueLinx Holdings Inc., together with its subsidiaries, engages in the distribution of residential and commercial building products in the United States. It distributes specialty products, including engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products; and structural products, such as lumber, plywood, oriented strand boards, rebars and remesh, as well as other wood products that are used for structural support in construction projects. It also provides various value-added services and solutions to customers and suppliers. The company serves national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers, and industrial manufacturers. BlueLinx Holdings Inc. was incorporated in 2004 and is headquartered in Marietta, Georgia.

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.

BlueLinx Holdings Inc. has a Value Score of 86, which is considered to be undervalued.

When you look at BlueLinx Holdings Inc.’s price-to-sales ratio at 0.31 compared to the industry median at 1.00, this company has a lower price relative to revenue compared to its peers. This could make BlueLinx Holdings Inc.’s stock more attractive for value investors.

BlueLinx Holdings Inc.’s price-earnings ratio is 24.80 compared to the industry median at 14.70. This means it has a higher share price relative to earnings compared to its peers. This could make BlueLinx Holdings Inc. less attractive for value investors.

Now, let’s assess BlueLinx Holdings Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 6.9, when compared to the industry median of 11.5, 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. BlueLinx Holdings Inc.’s shareholder yield is higher than its industry median ratio of 0.75%. 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. BlueLinx Holdings Inc.’s price-to-book ratio is lower than its industry median ratio of 2.24. This could make BlueLinx Holdings Inc. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BlueLinx Holdings Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BlueLinx Holdings Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 25.70. This could make BlueLinx Holdings Inc. more attractive because the lower P/FCF ratio indicates that BlueLinx Holdings Inc. 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.

GMS Inc.’s Value Grade

Value Grade:

GMS Inc. distributes wallboard, ceilings, steel framing and complementary construction products in the United States and Canada. The company offers ceilings products, including suspended mineral fibers, soft fibers, and metal ceiling systems primarily used in offices, hotels, hospitals, retail facilities, schools, and various other commercial and institutional buildings. It also provides steel framing products, such as steel tracks, studs, and various other steel products used to frame the interior walls of a commercial or institutional building, as well as ancillary products comprising tools, fasteners, insulation, EIFS and stucco, lumber and other wood products, ready-mix joint compound, and safety products. In addition, the company distributes a wallboard, ceilings, steel framing, and construction products, as well as commercial and residential building materials. It also operates through tool sales, rental, and service centers, as well as network of distribution centers. The company serves professional contractors and homebuilders. GMS Inc. was founded in 1971 and is headquartered in Tucker, Georgia.

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.

GMS Inc. has a Value Score of 76, which is considered to be undervalued.

GMS Inc.’s price-earnings ratio is 15.2 compared to the industry median at 14.7. This means that it has a higher price relative to its earnings compared to its peers. This makes GMS Inc. less attractive for value investors.

GMS Inc.’s price-to-book ratio is lower than its peers. This could make GMS Inc. more attractive for value investors when compared to the industry median at 2.24.

You can read more about GMS 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.

Hudson Technologies, Inc.’s Value Grade

Value Grade:

Hudson Technologies, Inc., through its subsidiary, Hudson Technologies Company, engages in the provision of solutions to recurring problems within the refrigeration industry in the United States. The company engages in the sale of refrigerant and industrial gas; provision of refrigerant management services consisting primarily of reclamation of refrigerants, re-usable cylinder refurbishment, and hydrostatic testing services; and RefrigerantSide services comprising system decontamination and recovery to remove moisture, oils, and other contaminants. It also offers Chiller Chemistry, which integrates several fluid tests of an operating system and the corresponding laboratory results into an engineering report; Fluid Chemistry, an abbreviated version of Chiller Chemistry, which is designed to quickly identify systems that require further examination; SmartEnergy OPS, a web-based real time continuous monitoring system, for measuring, modifying and improving the efficiency of energy systems, including air conditioning and refrigeration systems, in industrial and commercial applications; and ChillSmart, which combines the system optimization with Chiller Chemistry for providing a snapshot of a packaged chiller’s operating efficiency and health. In addition, the company participates in the generation of carbon offset projects. It serves commercial, industrial, and governmental customers, as well as refrigerant wholesalers, distributors, contractors, and refrigeration equipment manufacturers. The company was incorporated in 1991 and is headquartered in Woodcliff Lake, New Jersey.

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.

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

Hudson Technologies, Inc.’s price-earnings ratio is 10.8 compared to the industry median at 14.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Hudson Technologies, Inc. more attractive for value investors.

Hudson Technologies, Inc.’s price-to-book ratio is higher than its peers. This could make Hudson Technologies, Inc. less attractive for value investors when compared to the industry median at 2.24.

You can read more about Hudson 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.

Lavoro Limited’s Value Grade

Value Grade:

Lavoro Limited operates as an agricultural inputs retailer. The company operates through three segments: Brazil Cluster, LATAM Cluster, and Crop Care Cluster. It distributes agricultural inputs, such as crop protection, seeds, fertilizers, foliar fertilizers, biologicals, adjuvants, organominerals, and others for the agricultural industry. The company also produces specialty fertilizers, crop protection products, and biological crop inputs. It operates in Brazil, Colombia, and Uruguay. The company sells its products through its physical stores and digital channel. Lavoro Limited was founded in 2017 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.

Lavoro Limited has a Value Score of 93, which is considered to be undervalued.

Lavoro Limited’s price-to-book ratio is higher than its peers. This could make Lavoro Limited less attractive for value investors when compared to the industry median at 2.24.

You can read more about Lavoro 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 Trading Companies & Distributors 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 Trading Companies & Distributors stocks as well as other industrys.

Choosing Which of the 4 Best Trading Companies & Distributors 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.

• BlueLinx Holdings Inc. stock has a Value Grade of A.
• GMS Inc. stock has a Value Grade of B.
• Hudson Technologies, Inc. stock has a Value Grade of B.
• Lavoro Limited stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Trading Companies & Distributors 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 Trading Companies & Distributors Stocks

Want to learn more about Trading Companies & Distributors 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.

• 3 Undervalued Trading Companies & Distributors Stocks for Tuesday, October 29
• 4 Undervalued Trading Companies & Distributors Stocks for Monday, October 28
• 4 Undervalued Trading Companies & Distributors Stocks for Friday, October 25
• 4 Undervalued Trading Companies & Distributors Stocks for Thursday, October 24

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.