Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Ultra Clean (UCTT). UCTT is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 23.48. This compares to its industry's average Forward P/E of 28.17. Over the past 52 weeks, UCTT's Forward P/E has been as high as 28.59 and as low as 9.05, with a median of 14.99.
Investors should also note that UCTT holds a PEG ratio of 0.67. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. UCTT's PEG compares to its industry's average PEG of 0.80. UCTT's PEG has been as high as 0.82 and as low as 0.26, with a median of 0.58, all within the past year.
Investors should also recognize that UCTT has a P/B ratio of 1.59. 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 solid versus its industry's average P/B of 2.66. Over the past year, UCTT's P/B has been as high as 2.02 and as low as 0.86, with a median of 1.43.
Finally, our model also underscores that UCTT has a P/CF ratio of 16.45. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.51. Over the past year, UCTT's P/CF has been as high as 28.38 and as low as 7.55, with a median of 14.79.
Value investors will likely look at more than just these metrics, but the above data helps show that Ultra Clean is likely undervalued currently. And when considering the strength of its earnings outlook, UCTT sticks out as one of the market's strongest value stocks.
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Ultra Clean Holdings, Inc. (UCTT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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