The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Visteon (VC). VC is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 13.69. This compares to its industry's average Forward P/E of 21.17. Over the past year, VC's Forward P/E has been as high as 14.33 and as low as 8.02, with a median of 10.34.
Investors should also recognize that VC has a P/B ratio of 2.27. 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 attractive against its industry's average P/B of 3.64. Over the past 12 months, VC's P/B has been as high as 2.34 and as low as 1.31, with a median of 1.87.
Investors could also keep in mind Volvo (VLVLY), another Automotive - Original Equipment stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Shares of Volvo currently hold a Forward P/E ratio of 11.98, and its PEG ratio is 3.61. In comparison, its industry sports average P/E and PEG ratios of 21.17 and 1.32.
Over the last 12 months, VLVLY's P/E has been as high as 13.87, as low as 8.99, with a median of 11.52, and its PEG ratio has been as high as 3.67, as low as 0.60, with a median of 3.04.
Volvo also has a P/B ratio of 3.45 compared to its industry's price-to-book ratio of 3.64. Over the past year, its P/B ratio has been as high as 3.71, as low as 2.50, with a median of 3.04.
Value investors will likely look at more than just these metrics, but the above data helps show that Visteon and Volvo are likely undervalued currently. And when considering the strength of its earnings outlook, VC and VLVLY sticks out as one of the market's strongest value stocks.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
