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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Companhia Paranaense de Energia COPEL (ELP). ELP is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.14, which compares to its industry's average of 15.29. Over the past 52 weeks, ELP's Forward P/E has been as high as 13.47 and as low as 3.37, with a median of 10.06.
Investors should also recognize that ELP has a P/B ratio of 0.87. The P/B is a method of comparing a stock's market value to 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 2.21. Within the past 52 weeks, ELP's P/B has been as high as 1.04 and as low as 0.69, with a median of 0.87.
Investors could also keep in mind RWE AG (RWEOY), an Utility - Electric Power stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
RWE AG is trading at a forward earnings multiple of 10.32 at the moment, with a PEG ratio of 7.12. This compares to its industry's average P/E of 15.29 and average PEG ratio of 2.22.
RWEOY's Forward P/E has been as high as 20.53 and as low as 8.72, with a median of 17.40. During the same time period, its PEG ratio has been as high as 7.65, as low as 2.45, with a median of 4.04.
RWE AG sports a P/B ratio of 3 as well; this compares to its industry's price-to-book ratio of 2.21. In the past 52 weeks, RWEOY's P/B has been as high as 3.05, as low as 1.14, with a median of 2.37.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Companhia Paranaense de Energia COPEL and RWE AG are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ELP and RWEOY feels like a great value stock at the moment.
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