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 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 company to watch right now is RCM Technologies (RCMT). RCMT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.30. This compares to its industry's average Forward P/E of 16.07. Over the past 52 weeks, RCMT's Forward P/E has been as high as 15.75 and as low as 7.14, with a median of 9.36.
Finally, our model also underscores that RCMT has a P/CF ratio of 8.99. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 12.58. Over the past year, RCMT's P/CF has been as high as 14.40 and as low as 7.23, with a median of 9.31.
These are only a few of the key metrics included in RCM Technologies'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, RCMT looks like an impressive value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
