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.
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.
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 Rio Tinto (RIO). RIO is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.99 right now. For comparison, its industry sports an average P/E of 15.45. Over the last 12 months, RIO's Forward P/E has been as high as 10.78 and as low as 8.49, with a median of 9.64.
Investors should also note that RIO holds a PEG ratio of 0.37. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RIO's PEG compares to its industry's average PEG of 0.98. RIO's PEG has been as high as 0.43 and as low as 0.35, with a median of 0.39, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Rio Tinto is likely undervalued currently. And when considering the strength of its earnings outlook, RIO sticks out as one of the market's strongest value stocks.
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Rio Tinto PLC (RIO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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