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Should Value Investors Buy M.D.C. (MDC) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 M.D.C. (MDC - Free Report) . MDC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.

We should also highlight that MDC has a P/B ratio of 1.07. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.42. Within the past 52 weeks, MDC's P/B has been as high as 1.10 and as low as 0.65, with a median of 0.86.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MDC has a P/S ratio of 0.63. This compares to its industry's average P/S of 0.79.

MI Homes (MHO - Free Report) may be another strong Building Products - Home Builders stock to add to your shortlist. MHO is a # 2 (Buy) stock with a Value grade of A.

Furthermore, MI Homes holds a P/B ratio of 1.06 and its industry's price-to-book ratio is 1.42. MHO's P/B has been as high as 1.11, as low as 0.51, with a median of 0.71 over the past 12 months.

These are only a few of the key metrics included in M.D.C. and MI Homes strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, MDC and MHO look like an impressive value stock at the moment.


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M.D.C. Holdings, Inc. (MDC) - free report >>

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