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 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.
One stock to keep an eye on is HP (HPQ - Free Report) . HPQ is currently sporting a Zacks Rank of #2 (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. HPQ has a P/S ratio of 0.44. This compares to its industry's average P/S of 0.84.
Finally, investors will want to recognize that HPQ has a P/CF ratio of 5.91. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.24. Over the past 52 weeks, HPQ's P/CF has been as high as 8.97 and as low as 4.94, with a median of 6.77.
Value investors will likely look at more than just these metrics, but the above data helps show that HP is likely undervalued currently. And when considering the strength of its earnings outlook, HPQ sticks out at as one of the market's strongest value stocks.