Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 stock to keep an eye on is Hilltop Holdings (HTH - Free Report) . HTH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.22, which compares to its industry's average of 13.01. Over the last 12 months, HTH's Forward P/E has been as high as 13.70 and as low as 6.38, with a median of 12.21.
Another valuation metric that we should highlight is HTH's P/B ratio of 0.63. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. HTH's current P/B looks attractive when compared to its industry's average P/B of 1.65. Over the past year, HTH's P/B has been as high as 1.15 and as low as 0.50, with a median of 1.01.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HTH has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.8.
Finally, our model also underscores that HTH has a P/CF ratio of 5.88. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.42. Within the past 12 months, HTH's P/CF has been as high as 15.35 and as low as 4.74, with a median of 12.76.
Value investors will likely look at more than just these metrics, but the above data helps show that Hilltop Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, HTH sticks out at as one of the market's strongest value stocks.