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Are Investors Undervaluing Celestica (CLS) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Celestica (CLS - Free Report) . CLS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 6.90. This compares to its industry's average Forward P/E of 9.18. CLS's Forward P/E has been as high as 9.44 and as low as 6.40, with a median of 7.40, all within the past year.

We also note that CLS holds a PEG ratio of 0.48. 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. CLS's industry has an average PEG of 0.71 right now. CLS's PEG has been as high as 1.99 and as low as 0.44, with a median of 0.73, all within the past year.

Another valuation metric that we should highlight is CLS's P/B ratio of 0.97. The P/B ratio pits a stock's market value against 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 2.38. CLS's P/B has been as high as 1.10 and as low as 0.63, with a median of 0.84, 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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CLS has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.35.

Jabil (JBL - Free Report) may be another strong Electronics - Manufacturing Services stock to add to your shortlist. JBL is a # 2 (Buy) stock with a Value grade of A.

Shares of Jabil currently holds a Forward P/E ratio of 7.86, and its PEG ratio is 0.65. In comparison, its industry sports average P/E and PEG ratios of 9.18 and 0.71.

JBL's Forward P/E has been as high as 11.10 and as low as 7.49, with a median of 9.85. During the same time period, its PEG ratio has been as high as 0.93, as low as 0.62, with a median of 0.82.

Additionally, Jabil has a P/B ratio of 3.59 while its industry's price-to-book ratio sits at 2.38. For JBL, this valuation metric has been as high as 4.64, as low as 3.18, with a median of 3.98 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Celestica and Jabil are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CLS and JBL feels like a great value stock at the moment.


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