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 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 Big Lots (BIG). BIG is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 11.59. This compares to its industry's average Forward P/E of 24.52. Over the past 52 weeks, BIG's Forward P/E has been as high as 12.62 and as low as 3.32, with a median of 6.33.
Investors should also note that BIG holds a PEG ratio of 0.97. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BIG's PEG compares to its industry's average PEG of 2.49. BIG's PEG has been as high as 1.57 and as low as 0.50, with a median of 0.89, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Big Lots is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BIG feels like a great value stock at the moment.
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