While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 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.
Daqo New Energy (DQ - Free Report) is a stock many investors are watching right now. DQ is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 6.42 right now. For comparison, its industry sports an average P/E of 17.41. DQ's Forward P/E has been as high as 11.83 and as low as 4.11, with a median of 7, all within the past year.
We also note that DQ holds a PEG ratio of 1.26. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DQ's PEG compares to its industry's average PEG of 1.71. Over the past 52 weeks, DQ's PEG has been as high as 1.69 and as low as 0.59, with a median of 1.09.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. DQ has a P/S ratio of 0.77. This compares to its industry's average P/S of 1.25.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Daqo New Energy is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DQ feels like a great value stock at the moment.