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Should Value Investors Buy These Basic Materials Stocks?
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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is The Mosaic Company (MOS - Free Report) . MOS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 5.21, while its industry has an average P/E of 7.83. MOS's Forward P/E has been as high as 21.07 and as low as 4.49, with a median of 9.98, all within the past year.
Investors should also recognize that MOS has a P/B ratio of 1.55. 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 1.93. Over the past year, MOS's P/B has been as high as 1.55 and as low as 1.01, with a median of 1.26.
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. MOS has a P/S ratio of 1.51. This compares to its industry's average P/S of 1.8.
Finally, our model also underscores that MOS has a P/CF ratio of 6.20. 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 14.72. Over the past year, MOS's P/CF has been as high as 8.28 and as low as 4.77, with a median of 6.01.
Investors could also keep in mind Yara International ASA (YARIY - Free Report) , an Fertilizers stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Yara International ASA also has a P/B ratio of 1.95 compared to its industry's price-to-book ratio of 1.93. Over the past year, its P/B ratio has been as high as 1.95, as low as 1.46, with a median of 1.74.
Value investors will likely look at more than just these metrics, but the above data helps show that The Mosaic Company and Yara International ASA are likely undervalued currently. And when considering the strength of its earnings outlook, MOS and YARIY sticks out as one of the market's strongest value stocks.
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Should Value Investors Buy These Basic Materials 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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is The Mosaic Company (MOS - Free Report) . MOS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 5.21, while its industry has an average P/E of 7.83. MOS's Forward P/E has been as high as 21.07 and as low as 4.49, with a median of 9.98, all within the past year.
Investors should also recognize that MOS has a P/B ratio of 1.55. 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 1.93. Over the past year, MOS's P/B has been as high as 1.55 and as low as 1.01, with a median of 1.26.
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. MOS has a P/S ratio of 1.51. This compares to its industry's average P/S of 1.8.
Finally, our model also underscores that MOS has a P/CF ratio of 6.20. 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 14.72. Over the past year, MOS's P/CF has been as high as 8.28 and as low as 4.77, with a median of 6.01.
Investors could also keep in mind Yara International ASA (YARIY - Free Report) , an Fertilizers stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Yara International ASA also has a P/B ratio of 1.95 compared to its industry's price-to-book ratio of 1.93. Over the past year, its P/B ratio has been as high as 1.95, as low as 1.46, with a median of 1.74.
Value investors will likely look at more than just these metrics, but the above data helps show that The Mosaic Company and Yara International ASA are likely undervalued currently. And when considering the strength of its earnings outlook, MOS and YARIY sticks out as one of the market's strongest value stocks.