The meaning of value stocks
A value stock has traditionally been priced lower than the stock prices of companies in the same industry. This indicates that the company may be undervalued as investors do not express as much interest in these companies. The most common way to check value is price / earnings multiple, or P / E. A low P / E multiple is a good indication that the titer is undervalued.
The following stocks are considered notable value stocks in the defensive consumer sector:
- Bachoco SAB Industry (NYSE: IBA) – P / E: 8.35
- Large lots (NYSE: BIG) – P / E: 6.02
- China Online Education Gr (NYSE: COE) – P / E: 9.37
- Distribution Amcon (AMEX: DIT) – P / E: 6.98
- Nu Skin Companies (NYSE: NUS) – P / E: 8.91
This quarter Industrias Bachoco SAB experienced a decline in earnings per share, which was 2.06 in the first quarter and is now 1.48. Most recently, the company announced a dividend yield of 1.92%, which was down 0.02% from the 1.94% yield in the previous quarter.
Big Lots earnings per share for the second quarter stood at 1.09, while in the first quarter it was 2.62. The company’s most recent dividend yield stands at 2.09%, which increased 0.19% from 1.9% last quarter.
This quarter, China Online Education Gr saw a decline in earnings per share, which was 0.05 in the first quarter and is now -0.13. China Online Education Gr does not have a dividend yield, which investors should be aware of when considering holding any such stock.
Amcon Distributing’s earnings per share for the third quarter stood at 6.48, while in the second quarter it was 4.33. The company’s most recent dividend yield stands at 0.43%, down 0.08% from 0.51% in the previous quarter.
Nu Skin Enterprises reported second quarter earnings per share of 1.15, which was up 26.37% from the first quarter, which was 0.91. Most recently, the company announced a dividend yield of 2.8%, down 0.12% from the 2.92% yield in the previous quarter.
The importance: A value stock may need some time to rebound from its undervalued position. The risk of investing in a value stock is that this emergence will never materialize.