The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is PGT Innovations (PGTI). PGTI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.20, which compares to its industry's average of 11.65. Over the past 52 weeks, PGTI's Forward P/E has been as high as 22.60 and as low as 8.74, with a median of 12.36.
Another valuation metric that we should highlight is PGTI's P/B ratio of 2.10. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.10. Within the past 52 weeks, PGTI's P/B has been as high as 2.63 and as low as 1.72, with a median of 2.25.
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. PGTI has a P/S ratio of 0.89. This compares to its industry's average P/S of 1.08.
Finally, we should also recognize that PGTI has a P/CF ratio of 9.82. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.34. Within the past 12 months, PGTI's P/CF has been as high as 18.93 and as low as 8.03, with a median of 13.21.
Gibraltar Industries (ROCK) may be another strong Building Products - Miscellaneous stock to add to your shortlist. ROCK is a # 2 (Buy) stock with a Value grade of A.
Additionally, Gibraltar Industries has a P/B ratio of 1.63 while its industry's price-to-book ratio sits at 3.10. For ROCK, this valuation metric has been as high as 3.16, as low as 1.45, with a median of 1.92 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that PGT Innovations and Gibraltar Industries are likely undervalued currently. And when considering the strength of its earnings outlook, PGTI and ROCK sticks out as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PGT, Inc. (PGTI) : Free Stock Analysis Report
Gibraltar Industries, Inc. (ROCK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research