While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.
BASF (BASFY) is a stock many investors are watching right now. BASFY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 13.80, which compares to its industry's average of 16.23. Over the last 12 months, BASFY's Forward P/E has been as high as 16.32 and as low as 10.27, with a median of 11.92.
Investors will also notice that BASFY has a PEG ratio of 0.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BASFY's industry has an average PEG of 1.02 right now. Over the last 12 months, BASFY's PEG has been as high as 1.13 and as low as 0.93, with a median of 1.
Another notable valuation metric for BASFY is its P/B ratio of 1.20. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. BASFY's current P/B looks attractive when compared to its industry's average P/B of 2.12. Within the past 52 weeks, BASFY's P/B has been as high as 1.34 and as low as 0.88, with a median of 1.08.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BASFY has a P/S ratio of 0.65. This compares to its industry's average P/S of 0.93.
Finally, investors should note that BASFY has a P/CF ratio of 8.69. 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 11.90. BASFY's P/CF has been as high as 35.40 and as low as 7.44, with a median of 11.19, all within the past year.
These are just a handful of the figures considered in BASF's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BASFY is an impressive value stock right now.
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