Understanding Value Stocks
A value stock is traditionally defined in terms of how investors in the marketplace are valuing that company’s future growth prospects. Low P/E multiples are good base indicators that the company is undervalued and can most likely be labelled as a value stock.
The following stocks are considered to be notable value stocks in the utilities sector:
- Kenon Hldgs (NYSE:KEN) – P/E: 2.54
- Central Puerto (NYSE:CEPU) – P/E: 4.79
- Algonquin Power (NYSE:AQN) – P/E: 9.93
- Suburban Propane Partners (NYSE:SPH) – P/E: 8.95
- Pampa Energia (NYSE:PAM) – P/E: 0.2
This quarter, Kenon Hldgs experienced an increase in earnings per share, which was 2.69 in Q4 and is now 3.34. Kenon Hldgs does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Central Puerto’s earnings per share for Q1 sits at 0.05, whereas in Q4, they were at 0.01. Central Puerto does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
This quarter, Algonquin Power experienced a decrease in earnings per share, which was 0.21 in Q4 and is now 0.2. Most recently, the company reported a dividend yield of 4.33%, which has increased by 0.35% from last quarter’s yield of 3.98%.
Suburban Propane Partners saw an increase in earnings per share from 0.61 in Q1 to 2.02 now. The company’s most recent dividend yield sits at 8.12%, which has increased by 0.23% from 7.89% last quarter.
Most recently, Pampa Energia reported earnings per share at 0.58, whereas in Q4 earnings per share sat at 0.41. Pampa Energia does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
The Significance: 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 may never materialize.