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.
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 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 value investors might notice is Magic Software (MGIC - Free Report) . MGIC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 14.41, while its industry has an average P/E of 27.74. Over the past 52 weeks, MGIC's Forward P/E has been as high as 16.44 and as low as 12.35, with a median of 13.84.
Investors will also notice that MGIC has a PEG ratio of 1.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MGIC's PEG compares to its industry's average PEG of 2.29.
Finally, investors should note that MGIC has a P/CF ratio of 13.05. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. MGIC's P/CF compares to its industry's average P/CF of 31.38. MGIC's P/CF has been as high as 14.06 and as low as 10.60, with a median of 12.57, all within the past year.
These are only a few of the key metrics included in Magic Software's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MGIC looks like an impressive value stock at the moment.