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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is VALE S.A. (VALE). VALE is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
We should also highlight that VALE has a P/B ratio of 1.59. 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 solid versus its industry's average P/B of 1.59. VALE's P/B has been as high as 2 and as low as 1.40, with a median of 1.61, over the past year.
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. VALE has a P/S ratio of 1.8. This compares to its industry's average P/S of 5.19.
Finally, investors should note that VALE has a P/CF ratio of 8.92. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.95. Over the past 52 weeks, VALE's P/CF has been as high as 11.22 and as low as 6.82, with a median of 8.76.
These are only a few of the key metrics included in VALE S.A.'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, VALE looks like an impressive value stock at the moment.
VALE S.A. (VALE): Free Stock Analysis Report
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Zacks Investment Research