Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Collegium Pharmaceutical (COLL). COLL is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. COLL has a P/S ratio of 2. This compares to its industry's average P/S of 4.2.
Finally, we should also recognize that COLL has a P/CF ratio of 5.67. 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 14.20. Over the past year, COLL's P/CF has been as high as 7.17 and as low as 3.49, with a median of 5.10.
Value investors will likely look at more than just these metrics, but the above data helps show that Collegium Pharmaceutical is likely undervalued currently. And when considering the strength of its earnings outlook, COLL sticks out as one of the market's strongest value stocks.
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Collegium Pharmaceutical, Inc. (COLL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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