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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
BASF (BASFY) is a stock many investors are watching right now. BASFY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.74. This compares to its industry's average Forward P/E of 12.92. Over the last 12 months, BASFY's Forward P/E has been as high as 12.03 and as low as 7.08, with a median of 9.82.
Investors should also note that BASFY holds a PEG ratio of 0.61. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BASFY's PEG compares to its industry's average PEG of 1.60. Over the last 12 months, BASFY's PEG has been as high as 0.67 and as low as 0.44, with a median of 0.52.
Investors should also recognize that BASFY has a P/B ratio of 1.09. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. BASFY's current P/B looks attractive when compared to its industry's average P/B of 1.87. Over the past year, BASFY's P/B has been as high as 1.23 and as low as 0.70, with a median of 0.93.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BASFY has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.68.
Koppers (KOP) may be another strong Chemical - Diversified stock to add to your shortlist. KOP is a # 2 (Buy) stock with a Value grade of A.
Koppers sports a P/B ratio of 1.49 as well; this compares to its industry's price-to-book ratio of 1.87. In the past 52 weeks, KOP's P/B has been as high as 1.98, as low as 1.10, with a median of 1.50.
These are just a handful of the figures considered in BASF and Koppers's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BASFY and KOP is an impressive value stock right now.
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