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Are These Basic Materials Stocks a Great Value Stocks Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 company value investors might notice is Gerdau (GGB). GGB is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

Investors will also notice that GGB has a PEG ratio of 0.38. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GGB's PEG compares to its industry's average PEG of 0.42. Within the past year, GGB's PEG has been as high as 0.87 and as low as 0.19, with a median of 0.36.

Investors should also recognize that GGB has a P/B ratio of 1.11. 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 stock's P/B looks attractive against its industry's average P/B of 1.59. Over the past year, GGB's P/B has been as high as 1.97 and as low as 0.93, with a median of 1.35.

Finally, our model also underscores that GGB has a P/CF ratio of 2.92. 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. GGB's P/CF compares to its industry's average P/CF of 10.57. Over the past 52 weeks, GGB's P/CF has been as high as 9.43 and as low as 2.44, with a median of 4.93.

United States Steel (X) may be another strong Steel - Producers stock to add to your shortlist. X is a # 2 (Buy) stock with a Value grade of A.

Shares of United States Steel are currently trading at a forward earnings multiple of 3.05 and a PEG ratio of 0.47 compared to its industry's P/E and PEG ratios of 5.12 and 0.42, respectively.

Over the last 12 months, X's P/E has been as high as 19.31, as low as 1.60, with a median of 3.86, and its PEG ratio has been as high as 2.41, as low as 0.42, with a median of 0.76.

United States Steel sports a P/B ratio of 0.81 as well; this compares to its industry's price-to-book ratio of 1.59. In the past 52 weeks, X's P/B has been as high as 1.65, as low as 0.69, with a median of 1.09.

Value investors will likely look at more than just these metrics, but the above data helps show that Gerdau and United States Steel are likely undervalued currently. And when considering the strength of its earnings outlook, GGB and X sticks out as one of the market's strongest value stocks.


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