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Should Value Investors Buy New Gold (NGD) Stock?

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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.

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 value investors might notice is New Gold (NGD). NGD is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

NGD is also sporting a PEG ratio of 1.65. 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. NGD's PEG compares to its industry's average PEG of 1.85. NGD's PEG has been as high as 1,912.61 and as low as -1,426.30, with a median of 2.19, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. NGD has a P/S ratio of 2.23. This compares to its industry's average P/S of 3.38.

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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