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.
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 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 stock to keep an eye on is Konica Minolta (KNCAY). KNCAY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for KNCAY is its P/B ratio of 0.40. 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. This stock’s P/B looks attractive against its industry’s average P/B of 0.83. KNCAY’s P/B has been as high as 0.60 and as low as 0.39, with a median of 0.51, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. KNCAY has a P/S ratio of 0.23. This compares to its industry’s average P/S of 0.27.
Finally, investors should note that KNCAY has a P/CF ratio of 2.70. This metric focuses on a firm’s operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. KNCAY’s current P/CF looks attractive when compared to its industry’s average P/CF of 5.79. Over the past 52 weeks, KNCAY’s P/CF has been as high as 5.21 and as low as 2.65, with a median of 3.47.
Investors could also keep in mind Seiko Epson (SEKEY), an Office Automation and Equipment stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Seiko Epson also has a P/B ratio of 1.07 compared to its industry’s price-to-book ratio of 0.83. Over the past year, its P/B ratio has been as high as 1.68, as low as 1.04, with a median of 1.37.
These are just a handful of the figures considered in Konica Minolta and Seiko Epson’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 KNCAY and SEKEY is an impressive value stock right now.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.