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Are Investors Undervaluing China Telecom (CHA) Right Now?

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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.

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.

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 China Telecom (CHA - Free Report) . CHA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 5.11. This compares to its industry's average Forward P/E of 11.14. Over the past 52 weeks, CHA's Forward P/E has been as high as 9.41 and as low as 5.11, with a median of 7.77.

Investors will also notice that CHA has a PEG ratio of 0.98. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CHA's PEG compares to its industry's average PEG of 2.09. CHA's PEG has been as high as 1.74 and as low as 0.98, with a median of 1.46, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that China Telecom is likely undervalued currently. And when considering the strength of its earnings outlook, CHA sticks out at as one of the market's strongest value stocks.


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