What is a value stock?
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 are not showing that much interest in such companies. The most common way to check value is the price-to-earnings ratio, or P/E. A low P/E ratio is a good indication that the stock is undervalued.
The following stocks are considered notable value stocks in the consumer discretionary sector:
- Lucid Gr LCID – P/E: 6.82
- Dream Finder Houses DFH – P/E: 4.06
- China Automotive Systems CAAS – P/E: 9.27
- Academy Sports ASO – P/E: 7.23
- LCI Industry LCII – P/E: 4.67
Most recently, Lucid Gr reported earnings per share of -$0.4, while second quarter earnings per share were -$0.33. Most recently, Dream Finders Homes reported earnings per share of $0.64, while second-quarter earnings per share were $0.6. Most recently, China Automotive Systems reported earnings per share of $0.24, while second-quarter earnings per share were $0.31. Academy Sports’ earnings per share are $1.69 for the third quarter, compared to $2.3 for the second quarter. Most recently, the company reported a dividend yield of 0.62%, down 0.08% from last quarter’s 0.7% yield.
LCI Indus earnings per share are $2.4 in Q3 compared to $6.06 in Q2. Most recently, the company reported a dividend yield of 4.28%, up 1.12% from last quarter’s 3.16% yield.
The significance: A value stock can take time to recover from its undervalued position. The risk of investing in a value stock is that it may never happen.
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