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Should Value Investors Buy Commercial Metals (CMC) Stock?

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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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 Commercial Metals (CMC - Free Report) . CMC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.66, which compares to its industry's average of 9.19. CMC's Forward P/E has been as high as 9.05 and as low as 3.85, with a median of 7.37, all within the past year.

Finally, our model also underscores that CMC has a P/CF ratio of 4.75. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.05. Over the past year, CMC's P/CF has been as high as 6.21 and as low as 3.07, with a median of 4.12.

If you're looking for another solid Steel - Producers value stock, take a look at United States Steel (X - Free Report) . X is a # 2 (Buy) stock with a Value score of A.

Additionally, United States Steel has a P/B ratio of 0.65 while its industry's price-to-book ratio sits at 1.57. For X, this valuation metric has been as high as 1.14, as low as 0.39, with a median of 0.58 over the past year.

These are only a few of the key metrics included in Commercial Metals and United States Steel strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, CMC and X look like an impressive value stock at the moment.


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