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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 China Automotive Systems (CAAS - Free Report) . CAAS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CAAS has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.35.
Finally, investors should note that CAAS has a P/CF ratio of 2.72. 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. CAAS's current P/CF looks attractive when compared to its industry's average P/CF of 7.78. Within the past 12 months, CAAS's P/CF has been as high as 5.78 and as low as 1.74, with a median of 3.01.
Value investors will likely look at more than just these metrics, but the above data helps show that China Automotive Systems is likely undervalued currently. And when considering the strength of its earnings outlook, CAAS sticks out at as one of the market's strongest value stocks.