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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 J. Alexander's (JAX). JAX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.54 right now. For comparison, its industry sports an average P/E of 26.41. JAX's Forward P/E has been as high as 17.78 and as low as 13.54, with a median of 15.25, 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. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. JAX has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.95.
Finally, investors will want to recognize that JAX has a P/CF ratio of 7.07. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 17.37. Over the past year, JAX's P/CF has been as high as 9.46 and as low as 7.07, with a median of 8.37.
Value investors will likely look at more than just these metrics, but the above data helps show that J. Alexander's is likely undervalued currently. And when considering the strength of its earnings outlook, JAX sticks out at as one of the market's strongest value stocks.
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J. Alexander's Holdings, Inc. (JAX) : Free Stock Analysis Report
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