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.
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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Plains All American Pipeline (PAA). PAA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors should also recognize that PAA has a P/B ratio of 1.14. 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. This stock's P/B looks solid versus its industry's average P/B of 2.11. PAA's P/B has been as high as 1.18 and as low as 0.89, with a median of 0.97, over the past year.
Finally, investors should note that PAA has a P/CF ratio of 6.08. 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. PAA's P/CF compares to its industry's average P/CF of 9.17. Over the past year, PAA's P/CF has been as high as 6.29 and as low as 4.26, with a median of 4.93.
These are only a few of the key metrics included in Plains All American Pipeline'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, PAA looks like an impressive value stock at the moment.
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