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Are Investors Undervaluing These Basic Materials Stocks Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is ClevelandCliffs (CLF - Free Report) . CLF is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 3.96, while its industry has an average P/E of 7.90. Over the past year, CLF's Forward P/E has been as high as 7.33 and as low as 3.49, with a median of 5.66.

Another valuation metric that we should highlight is CLF's P/B ratio of 2.54. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.98. CLF's P/B has been as high as 5.16 and as low as 2.24, with a median of 2.97, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CLF has a P/S ratio of 0.63. This compares to its industry's average P/S of 1.81.

Finally, we should also recognize that CLF has a P/CF ratio of 3.84. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. CLF's current P/CF looks attractive when compared to its industry's average P/CF of 14.74. CLF's P/CF has been as high as 36.89 and as low as 3.39, with a median of 9.18, all within the past year.

Investors could also keep in mind Sibanye Gold Limited (SBSW - Free Report) , an Mining - Miscellaneous stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.

Furthermore, Sibanye Gold Limited holds a P/B ratio of 1.51 and its industry's price-to-book ratio is 3.98. SBSW's P/B has been as high as 4.49, as low as 1.41, with a median of 2.20 over the past 12 months.

These are just a handful of the figures considered in ClevelandCliffs and Sibanye Gold Limited's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CLF and SBSW is an impressive value stock right now.


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Cleveland-Cliffs Inc. (CLF) - free report >>

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