8 Basic Materials Stocks: Value Or Sector Bias?

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 |  Includes: AA, BLL, CE, CLF, MOS, NP, PX, RS
by: Stocks & Shares

Remember when the tech sector was "hot" and the basic materials sector was a boring, fringe topic of discussion? Those days are long gone. Tech is cheap: Microsoft Corporation (NASDAQ:MSFT) trades at a 11.1 price-to-earnings ratio while Intel Corporation (NASDAQ:INTC) trades at 11.26. Changing sector biases are hilarious when viewed from a historical perspective, and today basic materials firms receive considerable media attention. Industry analysis and discussions of proprietary technology have given way to debates about inflation and how various commodity producers are able to pass inflation on to their customers. Sector fads aside, are there attractive values and track-records in the basic materials sector? Summaries of 8 materials sector with four-star or higher ratings from S&P Stock Reports are listed below:

Alcoa, Inc. (NYSE:AA) recently traded at $10.76 per share. At this price level, the stock has a 1.1% dividend yield. For 10 out of the past 10 fiscal years, a share of AA paid a total of $5.34 in dividends. Of these dividend payments, a total of $2.34 were paid in the last five years.

AA shareholders have savored a 24.8% change in share price over the past year. At present, shares of this large cap stock trade at a price-to-book ratio of 0.8, a price-to-earnings multiple of 20.3, and a price-to-sales multiple of 0.5 (trailing twelve months). Over the past decade, shareholders enjoyed a 6.3% average annual return on equity.

Ball Corporation (NYSE:BLL) recently traded at $39.8 per share. At this price level, the stock has a 1.0% dividend yield. For 10 out of the past 10 fiscal years, a share of BLL paid a total of $1.67 in dividends. Of these dividend payments, a total of $1.00 were paid in the last five years.

BLL shareholders have enjoyed a 11.5% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 4.7, a price-to-earnings multiple of 15.1, and a price-to-sales multiple of 0.8 (trailing twelve months). Over the past decade, shareholders savored a 23.8% average annual return on equity.

Celanese Corporation (NYSE:CE) recently traded at $51.1599 per share. At this price level, the stock has a 0.5% dividend yield. For 6 out of the past 10 fiscal years, a share of CE paid a total of $0.90 in dividends. Of these dividend payments, a total of $0.82 were paid in the last five years.

CE shareholders have savored a 15.7% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 5.5, a price-to-earnings multiple of 13.2, and a price-to-sales multiple of 1.2 (trailing twelve months). Over the past decade, shareholders savored a 47.7% average annual return on equity.

Cliffs Natural Resources Inc. (NYSE:CLF) recently traded at $75.12 per share. At this price level, the stock has a 1.5% dividend yield. For 8 out of the past 10 fiscal years, a share of CLF paid a total of $1.84 in dividends. Of these dividend payments, a total of $1.61 were paid in the last five years.

CLF shareholders have savored a 20.5% change in share price over the past year. At present, shares of this large cap stock trade at a price-to-book ratio of 1.9, a price-to-earnings multiple of 5.7, and a price-to-sales multiple of 1.6 (trailing twelve months). Over the past decade, shareholders saw a 3.1% average annual return on equity.

The Mosaic Company (NYSE:MOS) recently traded at $57.41 per share. At this price level, the stock has a 0.4% dividend yield. For 3 out of the past 10 fiscal years, a share of MOS paid a total of $0.60 in dividends.

MOS shareholders have enjoyed a 13.9% change in share price over the past year. At present, shares of this large cap stock trade at a price-to-book ratio of 2.2, a price-to-earnings multiple of 11.0, and a price-to-sales multiple of 2.2 (trailing twelve months). Over the past decade, shareholders saw a 2.9% average annual return on equity.

Neenah Paper, Inc. (NYSE:NP) recently traded at $24.7 per share. At this price level, the stock has a 1.8% dividend yield. For 6 out of the past 10 fiscal years, a share of NP paid a total of $2.40 in dividends. Of these dividend payments, a total of $2.00 were paid in the last five years.

NP shareholders have enjoyed a 10.7% change in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 2.0, a price-to-earnings multiple of 13.8, and a price-to-sales multiple of 0.5 (trailing twelve months). Over the past decade shareholders sustained a -3.4% average annual return on equity.

Praxair Inc. (NYSE:PX) recently traded at $108.02 per share. At this price level, the stock has a 2.0% dividend yield. For 10 out of the past 10 fiscal years, a share of PX paid a total of $9.60 in dividends. Of these dividend payments, a total of $7.10 were paid in the last five years.

PX shareholders have seen a 1.1% change in share price over the past year. At present, shares of this large cap stock trade at a price-to-book ratio of 5.9, a price-to-earnings multiple of 19.8, and a price-to-sales multiple of 2.9 (trailing twelve months). Over the past decade shareholders savored a 21.9% average annual return on equity.

Reliance Steel & Aluminum Co. (NYSE:RS) recently traded at $55.99 per share. At this price level, the stock has a 0.9% dividend yield. For 10 out of the past 10 fiscal years, a share of RS paid a total of $2.42 in dividends. Of these dividend payments, a total of $1.74 were paid in the last five years.

RS shareholders have enjoyed a 15.0% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 1.4, a price-to-earnings multiple of 13.3, and a price-to-sales multiple of 0.6 (trailing twelve months). Over the past decade shareholders savored a 14.1% average annual return on equity.

Of these basic materials stocks, CLF and MOS are trading at attractive valuations. Moreover, both of these stocks have long-term histories of equity growth and multiple year track-records of dividend payments. CLF and MOS are worth considering, while the other basic materials stocks on this list are less interesting than the opportunities available in tech stocks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.