The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 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 stock to keep an eye on is POSCO (PKX). PKX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 5.64, while its industry has an average P/E of 9.19. Over the last 12 months, PKX's Forward P/E has been as high as 5.78 and as low as 5.14, with a median of 5.46.
Another notable valuation metric for PKX is its P/B ratio of 0.48. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.31. Within the past 52 weeks, PKX's P/B has been as high as 0.48 and as low as 0.24, with a median of 0.37.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PKX has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.35.
Another great Steel - Producers stock you could consider is Ternium (TX), which is a # 1 (Strong Buy) stock with a Value Score of A.
Ternium is trading at a forward earnings multiple of 7.40 at the moment, with a PEG ratio of 0.22. This compares to its industry's average P/E of 9.19 and average PEG ratio of 2.86.
Ternium sports a P/B ratio of 0.66 as well; this compares to its industry's price-to-book ratio of 1.31. In the past 52 weeks, TX's P/B has been as high as 0.77, as low as 0.39, with a median of 0.51.
Value investors will likely look at more than just these metrics, but the above data helps show that POSCO and Ternium are likely undervalued currently. And when considering the strength of its earnings outlook, PKX and TX sticks out as one of the market's strongest value stocks.
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