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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.
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 stock to keep an eye on is Flex (FLEX). FLEX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 10.11, which compares to its industry's average of 19.54. FLEX's Forward P/E has been as high as 14.34 and as low as 8.31, with a median of 11.32, all within the past year.
Investors will also notice that FLEX has a PEG ratio of 0.89. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FLEX's PEG compares to its industry's average PEG of 1.64. FLEX's PEG has been as high as 1.36 and as low as 0.80, with a median of 0.96, all within the past year.
Another valuation metric that we should highlight is FLEX's P/B ratio of 2.55. 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. This stock's P/B looks attractive against its industry's average P/B of 6.88. Within the past 52 weeks, FLEX's P/B has been as high as 2.93 and as low as 1.67, with a median of 2.58.
Finally, investors will want to recognize that FLEX has a P/CF ratio of 7.53. 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 18.61. Over the past 52 weeks, FLEX's P/CF has been as high as 8.66 and as low as 5.29, with a median of 7.61.
Value investors will likely look at more than just these metrics, but the above data helps show that Flex is likely undervalued currently. And when considering the strength of its earnings outlook, FLEX sticks out at as one of the market's strongest value stocks.
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