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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Israel Chemicals (ICL). ICL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 11.66, while its industry has an average P/E of 18.42. Over the past year, ICL's Forward P/E has been as high as 18.11 and as low as 11.38, with a median of 13.65.
ICL is also sporting a PEG ratio of 1.23. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ICL's PEG compares to its industry's average PEG of 1.78. Over the past 52 weeks, ICL's PEG has been as high as 1.91 and as low as 1.20, with a median of 1.42.
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. ICL has a P/S ratio of 1.23. This compares to its industry's average P/S of 1.55.
These are only a few of the key metrics included in Israel Chemicals'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, ICL looks like an impressive value stock at the moment.
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