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.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Global Ship Lease (GSL). GSL is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 3.25, which compares to its industry's average of 7.10. Over the past year, GSL's Forward P/E has been as high as 3.38 and as low as 1.89, with a median of 2.62.
We should also highlight that GSL has a P/B ratio of 0.69. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.43. Over the past 12 months, GSL's P/B has been as high as 0.71 and as low as 0.41, with a median of 0.58.
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. GSL has a P/S ratio of 1.35. This compares to its industry's average P/S of 1.37.
Finally, investors will want to recognize that GSL has a P/CF ratio of 2.25. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.46. Within the past 12 months, GSL's P/CF has been as high as 2.34 and as low as 1.31, with a median of 1.82.
Value investors will likely look at more than just these metrics, but the above data helps show that Global Ship Lease is likely undervalued currently. And when considering the strength of its earnings outlook, GSL sticks out as one of the market's strongest value stocks.
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Global Ship Lease, Inc. (GSL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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