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.
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 company value investors might notice is Cable One (CABO). CABO is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 4.01, while its industry has an average P/E of 7.26. CABO's Forward P/E has been as high as 11.51 and as low as 3.61, with a median of 7.87, all within the past year.
We should also highlight that CABO has a P/B ratio of 0.64. 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 solid versus its industry's average P/B of 1.54. Over the past 12 months, CABO's P/B has been as high as 1.27 and as low as 0.40, with a median of 0.88.
Value investors also use the P/S ratio. The P/S ratio 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. CABO has a P/S ratio of 0.6. This compares to its industry's average P/S of 0.73.
These are only a few of the key metrics included in Cable One's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CABO looks like an impressive value stock at the moment.
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Cable One, Inc. (CABO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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