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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 company to watch right now is Volvo (VLVLY). VLVLY is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.50. This compares to its industry's average Forward P/E of 20.10. VLVLY's Forward P/E has been as high as 12.33 and as low as 7.86, with a median of 10.66, all within the past year.
VLVLY is also sporting a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. VLVLY's PEG compares to its industry's average PEG of 1.02. VLVLY's PEG has been as high as 1.07 and as low as 0.51, with a median of 0.66, all within the past year.
Investors should also recognize that VLVLY has a P/B ratio of 2.30. 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 2.68. Within the past 52 weeks, VLVLY's P/B has been as high as 2.58 and as low as 1.78, with a median of 2.29.
These are only a few of the key metrics included in Volvo's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, VLVLY looks like an impressive value stock at the moment.
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