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, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
Rio Tinto (RIO) is a stock many investors are watching right now. RIO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.69 right now. For comparison, its industry sports an average P/E of 10.92. Over the last 12 months, RIO's Forward P/E has been as high as 12.28 and as low as 5.36, with a median of 7.52.
Another valuation metric that we should highlight is RIO's P/B ratio of 1.74. The P/B ratio is used to compare a stock's market value with 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 3.59. Within the past 52 weeks, RIO's P/B has been as high as 1.92 and as low as 1.13, with a median of 1.51.
South32 (SOUHY) may be another strong Mining - Miscellaneous stock to add to your shortlist. SOUHY is a # 2 (Buy) stock with a Value grade of A.
South32 sports a P/B ratio of 1.28 as well; this compares to its industry's price-to-book ratio of 3.59. In the past 52 weeks, SOUHY's P/B has been as high as 1.92, as low as 0.98, with a median of 1.24.
These are only a few of the key metrics included in Rio Tinto and South32 strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, RIO and SOUHY look like an impressive value stock at the moment.
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