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Should Value Investors Buy These Medical Stocks?

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·3 min read
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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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Owens & Minor (OMI). OMI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 12.44 right now. For comparison, its industry sports an average P/E of 24.94. OMI's Forward P/E has been as high as 14.53 and as low as 8.74, with a median of 11.52, all within the past year.

Finally, investors should note that OMI has a P/CF ratio of 9.64. 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 17.78. OMI's P/CF has been as high as 20.45 and as low as 7.07, with a median of 10.10, all within the past year.

Investors could also keep in mind PetIQ (PETQ), an Medical - Products stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Shares of PetIQ currently holds a Forward P/E ratio of 12.77, and its PEG ratio is 0.51. In comparison, its industry sports average P/E and PEG ratios of 24.94 and 1.98.

Over the past year, PETQ's P/E has been as high as 30.08, as low as 12.22, with a median of 18.50; its PEG ratio has been as high as 1.20, as low as 0.49, with a median of 0.61 during the same time period.

PetIQ also has a P/B ratio of 2.23 compared to its industry's price-to-book ratio of 2.90. Over the past year, its P/B ratio has been as high as 5.13, as low as 2.13, with a median of 3.11.

These are only a few of the key metrics included in Owens & Minor and PetIQ strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, OMI and PETQ look like an impressive value stock at the moment.

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PetIQ, Inc. (PETQ) : Free Stock Analysis Report
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