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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Atlantic Power (AT - Free Report) . AT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AT has a P/S ratio of 0.98. This compares to its industry's average P/S of 2.01.
Finally, investors should note that AT has a P/CF ratio of 3.07. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 6.74. Within the past 12 months, AT's P/CF has been as high as 8.37 and as low as 2.35, with a median of 3.67.
These are only a few of the key metrics included in Atlantic Power'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, AT looks like an impressive value stock at the moment.