Should Value Investors Buy These Retail-Wholesale Stocks?

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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Chico's FAS (CHS). CHS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 10.13 right now. For comparison, its industry sports an average P/E of 11.32. Over the last 12 months, CHS's Forward P/E has been as high as 185.57 and as low as -50.86, with a median of 12.33.

We should also highlight that CHS has a P/B ratio of 2.72. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.35. Over the past 12 months, CHS's P/B has been as high as 5.40 and as low as 1.70, with a median of 3.15.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CHS has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.5.

Finally, we should also recognize that CHS has a P/CF ratio of 6.22. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CHS's current P/CF looks attractive when compared to its industry's average P/CF of 11.64. CHS's P/CF has been as high as 72.75 and as low as -13.60, with a median of -2.35, all within the past year.

Investors could also keep in mind SuperGroup (SEPGY), an Retail - Apparel and Shoes stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

SuperGroup sports a P/B ratio of 1.55 as well; this compares to its industry's price-to-book ratio of 3.35. In the past 52 weeks, SEPGY's P/B has been as high as 4.63, as low as 1.55, with a median of 2.47.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Chico's FAS and SuperGroup are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CHS and SEPGY feels like a great value stock at the moment.

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