Are Investors Undervaluing These Basic Materials Stocks Right Now?

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 B2Gold Corp (BTG). BTG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.53, while its industry has an average P/E of 15. BTG's Forward P/E has been as high as 12.65 and as low as 7.18, with a median of 9.51, all within the past year.

Investors will also notice that BTG has a PEG ratio of 1.11. 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. BTG's industry has an average PEG of 1.98 right now. Over the last 12 months, BTG's PEG has been as high as 1.78 and as low as 0.44, with a median of 1.31.

Finally, investors will want to recognize that BTG has a P/CF ratio of 5.75. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BTG's current P/CF looks attractive when compared to its industry's average P/CF of 7.45. Within the past 12 months, BTG's P/CF has been as high as 10.20 and as low as 5.08, with a median of 7.38.

Eldorado Gold (EGO) may be another strong Mining - Gold stock to add to your shortlist. EGO is a # 2 (Buy) stock with a Value grade of A.

Eldorado Gold is trading at a forward earnings multiple of 13.61 at the moment, with a PEG ratio of 2.72. This compares to its industry's average P/E of 15 and average PEG ratio of 1.98.

EGO's Forward P/E has been as high as 21.21 and as low as 10.15, with a median of 12.92. During the same time period, its PEG ratio has been as high as 4.24, as low as 2.03, with a median of 2.58.

Furthermore, Eldorado Gold holds a P/B ratio of 0.45 and its industry's price-to-book ratio is 1.19. EGO's P/B has been as high as 0.68, as low as 0.37, with a median of 0.50 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that B2Gold Corp and Eldorado Gold are likely undervalued currently. And when considering the strength of its earnings outlook, BTG and EGO sticks out as one of the market's strongest value stocks.

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