11 Oversold And Undervalued Basic Materials Stocks
By Kapitall:Do you like gaining exposure to commodities? One way is through basic materials stocks. For ideas on how to find interesting basic materials stocks, we ran a screen. We began by screening the basic materials sector for stocks that are technically oversold, with Relative Strength Index readings over the last 14 days below 40. We then screened these names for those that also appear undervalued relative to the Graham Number, a measure of maximum fair value created by the "godfather of value investing" Benjamin Graham. It is based off of a stock's EPS and book value per share (BVPS). Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS) The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.
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