Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 BASF (BASFY). BASFY 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 11.50, which compares to its industry's average of 16.52. BASFY's Forward P/E has been as high as 12.25 and as low as 7.08, with a median of 9.11, all within the past year.
We should also highlight that BASFY has a P/B ratio of 1.05. The P/B ratio is used to compare a stock's market value with 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 2.61. Over the past year, BASFY's P/B has been as high as 1.46 and as low as 0.71, with a median of 0.95.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BASFY has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.69.
Finally, investors will want to recognize that BASFY has a P/CF ratio of 5.22. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.74. Within the past 12 months, BASFY's P/CF has been as high as 6.64 and as low as 3.29, with a median of 4.61.
These figures are just a handful of the metrics value investors tend to look at, but they help show that BASF is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BASFY feels like a great value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report