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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 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 company to watch right now is Mosaic (MOS). MOS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 12.98, while its industry has an average P/E of 22.15. Over the past 52 weeks, MOS's Forward P/E has been as high as 61.79 and as low as 12.92, with a median of 22.30.
Investors will also notice that MOS has a PEG ratio of 1.85. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MOS's PEG compares to its industry's average PEG of 2.85. Over the last 12 months, MOS's PEG has been as high as 8.83 and as low as 1.85, with a median of 3.19.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MOS has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.49.
Finally, investors should note that MOS has a P/CF ratio of 7.15. 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. MOS's P/CF compares to its industry's average P/CF of 10.98. Over the past 52 weeks, MOS's P/CF has been as high as 43.68 and as low as 5.56, with a median of 16.41.
Value investors will likely look at more than just these metrics, but the above data helps show that Mosaic is likely undervalued currently. And when considering the strength of its earnings outlook, MOS sticks out at as one of the market's strongest value stocks.
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