What is a Value Stock?
A value stock traditionally has a lower price when compared to stock prices of companies in the same industry. This indicates that the company may be undervalued, as investors are not expressing as much interest in such companies. The most commonly used way to check for value is with the price-to-earnings multiple, or P/E. A low P/E multiple is a good indication that the stock is undervalued.
Below is a list of notable value stocks in the communication services sector:
- Urban One UONE – P/E: 5.36
- AMC Networks AMCX – P/E: 4.84
- Zedge ZDGE – P/E: 4.84
- Alphabet GOOG – P/E: 1.02
- Urban One UONEK – P/E: 3.69
Urban One’s earnings per share for Q1 sits at $0.3, whereas in Q4, they were at 0.12. AMC Networks saw an increase in earnings per share from 0.54 in Q4 to $2.54 now. Zedge saw a decrease in earnings per share from 0.16 in Q2 to $0.05 now. Alphabet saw a decrease in earnings per share from 1.53 in Q4 to $1.23 now. Urban One saw an increase in earnings per share from 0.12 in Q4 to $0.3 now.
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.