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 company to watch right now is ARKO (ARKO). ARKO is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A.
Another notable valuation metric for ARKO is its P/B ratio of 2.2. The P/B ratio pits a stock's market value against 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 5.53. Within the past 52 weeks, ARKO's P/B has been as high as 3.27 and as low as 1.60, with a median of 2.19.
Investors could also keep in mind Grocery Outlet (GO), another Consumer Products - Staples stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Grocery Outlet is currently trading with a Forward P/E ratio of 18.57 while its PEG ratio sits at 2.56. Both of the company's metrics compare favorably to its industry's average P/E of 19.62 and average PEG ratio of 2.73.
GO's price-to-earnings ratio has been as high as 22.28 and as low as 11.17, with a median of 16.95, while its PEG ratio has been as high as 16.85 and as low as 1.65, with a median of 3.36, all within the past year.
Grocery Outlet sports a P/B ratio of 1.38 as well; this compares to its industry's price-to-book ratio of 5.53. In the past 52 weeks, GO's P/B has been as high as 1.70, as low as 0.89, with a median of 1.29.
Value investors will likely look at more than just these metrics, but the above data helps show that ARKO and Grocery Outlet are likely undervalued currently. And when considering the strength of its earnings outlook, ARKO and GO sticks out as one of the market's strongest value stocks.
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ARKO Corp. (ARKO): Free Stock Analysis Report Grocery Outlet Holding Corp. (GO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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