3 Undervalued Basic Materials Small Caps With Analyst Love

Includes: CDE, REX, ROCK
by: ZetaKap

Interested in basic materials stocks? Looking for undervalued stocks? Do you prefer stocks that analysts rate as 'Buy', or better? For a closer look at stocks of this nature, we ran a screen.

The Price/Cash Flow ratio is a price-multiple valuation metric that also measures a firm's future financial health. An advantage of using cash flow is that it removes non-cash factors, which helps provide a clearer picture of how much money the firm is taking in from a valuation standpoint. Price/Cash Flow Ratio = Current Stock Price/Cash Flow Per Share

The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.

We first looked for basic materials stocks. We then screened for businesses that are trading at low price-multiple valuations (P/CFO<10)(P/BV<1). We then looked for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps.

Do you think these stocks will go up in price? Use our list to help with your own analysis.

1) Coeur d'Alene Mines Corporation (NYSE:CDE)

Sector: Basic Materials
Industry: Silver
Market Cap: $1.53B
Beta: 1.69

Coeur d'Alene Mines Corporation has a Price/Cash Flow Ratio of 9.98 and Price/Book Value Ratio of 0.72 and Analysts' Rating of 2.50. The short interest was 4.66% as of 05/24/2012. Coeur d'Alene Mines Corporation, together with its subsidiaries, engages in the ownership, operation, exploration, and development of silver and gold mining properties primarily located in the United States, Mexico, Bolivia, Argentina, and Australia. Its properties include the San Bartolome silver mine in Bolivia; the Palmarejo silver-gold mine in Mexico; the Kensington gold mine in Alaska; and the Rochester silver-gold mine in Nevada. The company owns and operates the Martha silver-gold mine in Argentina, as well as owns a non-operating interest in a silver-base metal mine in Australia.

2) REX American Resources Corporation (NYSE:REX)

Sector: Basic Materials
Industry: Specialty Chemicals
Market Cap: $162.51M
Beta: 1.06

REX American Resources Corporation has a Price/Cash Flow Ratio of 2.17 and Price/Book Value Ratio of 0.64 and Analysts' Rating of 1.00. The short interest was 8.45% as of 05/24/2012. REX American Resources Corporation engages in the production and sale of ethanol and distillers grains. It is also involved in leasing real estate properties. The company was formerly known as REX Stores Corporation and changed its name to REX American Resources Corporation in June 2010 to reflect the company's focus.

3) Gibraltar Industries, Inc. (NASDAQ:ROCK)

Sector: Basic Materials
Industry: Steel & Iron
Market Cap: $327.39M
Beta: 2.12

Gibraltar Industries, Inc. has a Price/Cash Flow Ratio of 9.27 and Price/Book Value Ratio of 0.71 and Analysts' Rating of 2.50. The short interest was 2.90% as of 05/24/2012. Gibraltar Industries, Inc. manufactures and distributes building products for the home improvement, highway construction, building materials, architectural industries, and construction industries. The company's products include a line of bar grating and safety plank grating for use in walkways, platforms, safety barriers, drainage covers, and ventilation grates; expanded and perforated metal used in walkways, catwalks, shelving, fencing, barriers, patio furniture, and other applications; metal lath products for use in exterior stucco, stone, and tile projects; fiberglass grating; and expansion joint systems, bearing assemblies, and pavement sealing systems used in bridge and highway infrastructure construction. Its products also consist of roof and foundation ventilation products and accessories; mail storage solutions comprising single mailboxes and cluster boxes for multi-unit housing; roof edging, underlayment, and flashing; soffits and trim; drywall corner bead; coated coil stock; metal roofing and accessories; steel framing; rain dispersion products, such as gutters and accessories; and lawn and garden products.

*Company profiles were sourced from Finviz. Financial data was sourced from Google Finance and Yahoo Finance.

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