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 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 stock to keep an eye on is The Geo Group (GEO). GEO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another notable valuation metric for GEO is its P/B ratio of 1.20. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.91. GEO's P/B has been as high as 1.36 and as low as 0.66, with a median of 0.85, over the past year.
Finally, investors should note that GEO has a P/CF ratio of 5.86. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.72. Over the past 52 weeks, GEO's P/CF has been as high as 6.65 and as low as 2.88, with a median of 4.05.
Another great REIT and Equity Trust - Other stock you could consider is Service Properties Trust (SVC), which is a # 2 (Buy) stock with a Value Score of A.
Service Properties Trust also has a P/B ratio of 0.81 compared to its industry's price-to-book ratio of 1.91. Over the past year, its P/B ratio has been as high as 1.03, as low as 0.56, with a median of 0.85.
Value investors will likely look at more than just these metrics, but the above data helps show that The Geo Group and Service Properties Trust are likely undervalued currently. And when considering the strength of its earnings outlook, GEO and SVC sticks out as one of the market's strongest value stocks.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.