Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Chemicals - Commodity 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.

Latest Chemicals - Commodity Stock News

Before choosing which top Chemicals - Commodity stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The outlook for the chemicals commodity sub-industry is positive. This industry acts as a middleman to many end markets, so there are a variety of possible mechanisms to spur growth for the industry. There are favorable supply and demand conditions for companies in this sub-industry, with the increase of financial expenditures over the last year. The effects of the pandemic are still being felt throughout supply chains all over the world. Petrochemicals, a main component of this industry, can be defined as a large group of chemicals derived from natural gas and petroleum. The early part of 2021 saw the gulf coast experiencing severe weather, which shut down many petrochemical plants. This increased the price of petrochemicals dramatically, decreasing the already narrow supply. Analysts see this low supply continuing over the next months into 2022. This low supply equates to higher prices that the sub-industry can demand from customers.

Why Focus on Undervalued Chemicals - Commodity 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.

3 Undervalued Chemicals - Commodity Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Chemicals - Commodity industry for Monday, November 13, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Chemicals - Commodity 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.

LyondellBasell Industries NV’s Value Grade

Value Grade:

LyondellBasell Industries N.V. is a chemical company. Its segments include Olefins and Polyolefins-Americas (O&P-Americas;), Olefins and Polyolefins-Europe, Asia, International (O&P-EAI;), Intermediates and Derivatives (I&D;), Advanced Polymer Solutions (APS), Refining, and Technology. O&P-Americas; and O&P-EAI; segment produces and markets olefins and co-products, polyethylene and polypropylene. I&D; segment produces and markets propylene oxide and its derivatives; oxyfuels and related products, and intermediate chemicals, such as styrene monomer, ethylene oxide and ethylene glycol. APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders. It offers recycled technical compounds in in Italy and Poland. Refining segment refines heavy, high-sulfur crude oil and other crude oils of various types. Technology segment develops and licenses chemical and polyolefin process technologies.

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.

LyondellBasell Industries NV has a Value Score of 65, which is considered to be undervalued.

When you look at LyondellBasell Industries NV’s price-to-sales ratio at 0.73 compared to the industry median at 0.95, this company has a lower price relative to revenue compared to its peers. This could make LyondellBasell Industries NV’s stock more attractive for value investors.

LyondellBasell Industries NV’s price-earnings ratio is 13.29 compared to the industry median at 15.51. This means it has a lower share price relative to earnings compared to its peers. This could make LyondellBasell Industries NV more attractive for value investors.

Now, let’s assess LyondellBasell Industries NV’s EV/EBITDA ratio, also known as enterprise multiple. At 7.8, when compared to the industry median of 10.2, 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. LyondellBasell Industries NV’s shareholder yield is higher than its industry median ratio of 1.72%. 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. LyondellBasell Industries NV’s price-to-book ratio is higher than its industry median ratio of 2.18. This could make LyondellBasell Industries NV less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at LyondellBasell Industries NV’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. LyondellBasell Industries NV’s price-to-free-cash-flow ratio is higher than its industry median ratio of 12.83. This could make LyondellBasell Industries NV less attractive because the higher P/FCF ratio indicates that LyondellBasell Industries NV 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.

Origin Materials Inc’s Value Grade

Value Grade:

Origin Materials, Inc. is a carbon negative materials company. It has developed a platform for turning the carbon found in non-food biomass into useful materials, while capturing carbon in the process. It replaces petroleum-based materials with decarbonized materials in a range of end products, such as food and beverage packaging, clothing, textiles, plastics, car parts, carpeting, tires, adhesives, soil amendments and more. It has developed a platform technology to convert biomass, or plant-based carbon, into the building block chemicals chloromethyl furfural (CMF) and hydrothermal carbon (HTC), which are referred as furanic intermediates, as well as other minor products. Its technology converts sustainable feedstocks, such as sustainably harvested wood residues, agricultural waste, wood waste, and even corrugated cardboard into materials and products that are made from fossil feedstocks, such as petroleum and natural gas. These sustainable feedstocks are not used in food production.

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.

Origin Materials Inc has a Value Score of 61, which is considered to be undervalued.

Origin Materials Inc’s price-earnings ratio is 4.5 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Origin Materials Inc more attractive for value investors.

Origin Materials Inc’s price-to-book ratio is higher than its peers. This could make Origin Materials Inc less attractive for value investors when compared to the industry median at 2.18.

You can read more about Origin Materials 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.

Westlake Chemical Partners LP’s Value Grade

Value Grade:

Westlake Chemical Partners LP is a limited partnership formed by Westlake Corporation. The Company operates, acquires and develops ethylene production facilities and related assets. Its business and operations are conducted through Westlake Chemical OpCo LP (OpCo). OpCo's assets are comprised of three ethylene production facilities, which primarily convert ethane into ethylene and have an aggregate annual capacity of approximately 3.7 billion pounds, and a 200-mile ethylene pipeline. OpCo owns two ethylene production facilities at Westlake's Lake Charles, Louisiana site (Petro 1 and Petro 2, collectively Lake Charles Olefins), with an annual combined capacity of approximately 3.0 billion pounds; and one ethylene production facility at Westlake's Calvert City, Kentucky site (Calvert City Olefins), with an annual capacity of approximately 730 million pounds. OpCo produces ethylene co-products, including chemical grade propylene, crude butadiene, pyrolysis gasoline and hydrogen.

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.

Westlake Chemical Partners LP has a Value Score of 93, which is considered to be undervalued.

Westlake Chemical Partners LP’s price-earnings ratio is 13.2 compared to the industry median at 15.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Westlake Chemical Partners LP more attractive for value investors.

Westlake Chemical Partners LP’s price-to-book ratio is higher than its peers. This could make Westlake Chemical Partners LP less attractive for value investors when compared to the industry median at 2.18.

You can read more about Westlake Chemical Partners LP’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 Chemicals - Commodity 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 Chemicals - Commodity stocks as well as other industrys.

Choosing Which of the 3 Best Chemicals - Commodity 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.

• LyondellBasell Industries NV stock has a Value Grade of B.
• Origin Materials Inc stock has a Value Grade of B.
• Westlake Chemical Partners LP stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Chemicals - Commodity 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 Chemicals - Commodity Stocks

Want to learn more about Chemicals - Commodity 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 Chemicals - Commodity Stocks for Monday, November 13
• Why Koppers Holdings Inc.’s (KOP) Stock Is Up 4.02%
• 3 Undervalued Chemicals - Commodity Stocks for Thursday, November 09
• Why Braskem SA (ADR)’s (BAK) Stock Is Up 14.94%

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.