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 Ally Financial (ALLY - Free Report) . ALLY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
ALLY is also sporting a PEG ratio of 0.59. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ALLY's PEG compares to its industry's average PEG of 0.76. ALLY's PEG has been as high as 0.65 and as low as 0.45, with a median of 0.57, all within the past year.
Finally, investors will want to recognize that ALLY has a P/CF ratio of 4.06. 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. ALLY's P/CF compares to its industry's average P/CF of 4.81. ALLY's P/CF has been as high as 4.32 and as low as 3.08, with a median of 3.94, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Ally Financial is likely undervalued currently. And when considering the strength of its earnings outlook, ALLY sticks out at as one of the market's strongest value stocks.