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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 The Gap (GPS). GPS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Investors should also recognize that GPS has a P/B ratio of 3.02. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.14. GPS's P/B has been as high as 3.31 and as low as 1.25, with a median of 1.73, over the past year.
Finally, our model also underscores that GPS has a P/CF ratio of 12.96. 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. GPS's P/CF compares to its industry's average P/CF of 13.95. Over the past 52 weeks, GPS's P/CF has been as high as 15.37 and as low as 5.38, with a median of 8.28.
Investors could also keep in mind Tapestry (TPR), an Retail - Apparel and Shoes stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Tapestry is trading at a forward earnings multiple of 9.92 at the moment, with a PEG ratio of 0.86. This compares to its industry's average P/E of 15.66 and average PEG ratio of 0.98.
Over the past year, TPR's P/E has been as high as 11.52, as low as 6.25, with a median of 9.41; its PEG ratio has been as high as 0.92, as low as 0.54, with a median of 1.22 during the same time period.
Tapestry also has a P/B ratio of 4.08 compared to its industry's price-to-book ratio of 4.14. Over the past year, its P/B ratio has been as high as 4.63, as low as 2.50, with a median of 3.90.
These are just a handful of the figures considered in The Gap and Tapestry'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 GPS and TPR is an impressive value stock right now.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
See New Top 10 Stocks >>The Gap, Inc. (GPS) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
