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 stock to keep an eye on is Asbury Automotive Group (ABG). ABG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
ABG is also sporting a PEG ratio of 0.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABG's industry has an average PEG of 0.92 right now. Over the past 52 weeks, ABG's PEG has been as high as 0.45 and as low as 0.23, with a median of 0.29.
Another notable valuation metric for ABG is its P/B ratio of 1.52. 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. ABG's current P/B looks attractive when compared to its industry's average P/B of 2. Over the past 12 months, ABG's P/B has been as high as 2.13 and as low as 1.18, with a median of 1.56.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ABG has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.3.
Finally, investors should note that ABG has a P/CF ratio of 4.17. 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. ABG's current P/CF looks attractive when compared to its industry's average P/CF of 5.32. Within the past 12 months, ABG's P/CF has been as high as 6.17 and as low as 3.56, with a median of 4.66.
Rush Enterprises (RUSHA) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. RUSHA is a # 2 (Buy) stock with a Value grade of A.
Rush Enterprises is currently trading with a Forward P/E ratio of 10.49 while its PEG ratio sits at 0.70. Both of the company's metrics compare favorably to its industry's average P/E of 6.49 and average PEG ratio of 0.92.
Over the last 12 months, RUSHA's P/E has been as high as 11.78, as low as 8.03, with a median of 9.80, and its PEG ratio has been as high as 0.79, as low as 0.54, with a median of 0.65.
Additionally, Rush Enterprises has a P/B ratio of 1.66 while its industry's price-to-book ratio sits at 2. For RUSHA, this valuation metric has been as high as 1.94, as low as 1.43, with a median of 1.66 over the past year.
These are only a few of the key metrics included in Asbury Automotive Group and Rush Enterprises strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ABG and RUSHA look like an impressive value stock at the moment.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
Rush Enterprises, Inc. (RUSHA) : Free Stock Analysis Report
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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.
