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.
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 company to watch right now is Hostess Brands . TWNK is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TWNK has a P/S ratio of 2.63. This compares to its industry's average P/S of 3.95.
Finally, investors should note that TWNK has a P/CF ratio of 16.69. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TWNK's current P/CF looks attractive when compared to its industry's average P/CF of 19.26. Over the past 52 weeks, TWNK's P/CF has been as high as 21.05 and as low as 14.15, with a median of 16.98.
These are just a handful of the figures considered in Hostess Brands's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TWNK is an impressive value stock right now.