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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Comp En De Mn Cemig (CIG). CIG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.02. This compares to its industry's average Forward P/E of 13.54. CIG's Forward P/E has been as high as 9.06 and as low as 6.40, with a median of 7.89, all within the past year.
Another notable valuation metric for CIG is its P/B ratio of 1.23. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. CIG's current P/B looks attractive when compared to its industry's average P/B of 2.17. Within the past 52 weeks, CIG's P/B has been as high as 1.34 and as low as 1, with a median of 1.15.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CIG has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.67.
Finally, investors will want to recognize that CIG has a P/CF ratio of 4.70. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 12.01. Over the past 52 weeks, CIG's P/CF has been as high as 6.85 and as low as 4.14, with a median of 4.86.
Investors could also keep in mind TransAlta (TAC), an Utility - Electric Power stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Furthermore, TransAlta holds a P/B ratio of 2.49 and its industry's price-to-book ratio is 2.17. TAC's P/B has been as high as 3.24, as low as 1.87, with a median of 2.60 over the past 12 months.
These are only a few of the key metrics included in Comp En De Mn Cemig and TransAlta strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, CIG and TAC look like an impressive value stock at the moment.
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