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Should Value Investors Buy New Gold (NGD) Stock?

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company to watch right now is New Gold (NGD). NGD 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 11.13, which compares to its industry's average of 18.19. Over the past year, NGD's Forward P/E has been as high as 33.27 and as low as -15.29, with a median of 13.36.

Investors should also recognize that NGD has a P/B ratio of 0.84. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. NGD's current P/B looks attractive when compared to its industry's average P/B of 1.38. Over the past year, NGD's P/B has been as high as 1.14 and as low as 0.56, with a median of 0.79.

Finally, we should also recognize that NGD has a P/CF ratio of 3.92. 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. NGD's P/CF compares to its industry's average P/CF of 13.18. Within the past 12 months, NGD's P/CF has been as high as 13.02 and as low as 3.21, with a median of 6.86.

Value investors will likely look at more than just these metrics, but the above data helps show that New Gold is likely undervalued currently. And when considering the strength of its earnings outlook, NGD sticks out at as one of the market's strongest value stocks.

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