While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Alpha and Omega Semiconductor (AOSL). AOSL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.97. This compares to its industry's average Forward P/E of 20.44. AOSL's Forward P/E has been as high as 20.63 and as low as 7.51, with a median of 11.05, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AOSL has a P/S ratio of 2.01. This compares to its industry's average P/S of 3.35.
Finally, we should also recognize that AOSL has a P/CF ratio of 12.56. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AOSL's P/CF compares to its industry's average P/CF of 33.25. Over the past year, AOSL's P/CF has been as high as 17.01 and as low as 6.10, with a median of 9.51.
Another great Electronics - Semiconductors stock you could consider is United Microelectronics (UMC), which is a # 2 (Buy) stock with a Value Score of A.
Shares of United Microelectronics currently holds a Forward P/E ratio of 9.57, and its PEG ratio is 0.33. In comparison, its industry sports average P/E and PEG ratios of 20.44 and 0.78.
Over the last 12 months, UMC's P/E has been as high as 20.05, as low as 8.65, with a median of 13.65, and its PEG ratio has been as high as 0.90, as low as 0.30, with a median of 0.68.
Furthermore, United Microelectronics holds a P/B ratio of 2.75 and its industry's price-to-book ratio is 11.38. UMC's P/B has been as high as 3.61, as low as 2.16, with a median of 2.85 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Alpha and Omega Semiconductor and United Microelectronics are likely undervalued currently. And when considering the strength of its earnings outlook, AOSL and UMC sticks out as one of the market's strongest value stocks.
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Alpha and Omega Semiconductor Limited (AOSL) : Free Stock Analysis Report
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