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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 value investors might notice is Host Hotels & Resorts (HST). HST is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.84. This compares to its industry's average Forward P/E of 15.33. Over the past year, HST's Forward P/E has been as high as 9.77 and as low as 6.79, with a median of 8.52.
HST is also sporting a PEG ratio of 1.65. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HST's PEG compares to its industry's average PEG of 1.76. Over the last 12 months, HST's PEG has been as high as 1.67 and as low as 1.54, with a median of 1.59.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HST has a P/S ratio of 2.14. This compares to its industry's average P/S of 3.91.
Finally, we should also recognize that HST has a P/CF ratio of 8.31. 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 stock's P/CF looks attractive against its industry's average P/CF of 15.22. Over the past year, HST's P/CF has been as high as 9.04 and as low as 6.05, with a median of 7.87.
Piedmont Realty Trust, Inc. (PDM) may be another strong REIT and Equity Trust - Other stock to add to your shortlist. PDM is a Zacks Rank of #2 (Buy) stock with a Value grade of A.
Furthermore, Piedmont Realty Trust, Inc. holds a P/B ratio of 0.72 and its industry's price-to-book ratio is 1.79. PDM's P/B has been as high as 0.84, as low as 0.46, with a median of 0.63 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Host Hotels & Resorts and Piedmont Realty Trust, Inc. are likely undervalued currently. And when considering the strength of its earnings outlook, HST and PDM sticks out as one of the market's strongest value stocks.
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Host Hotels & Resorts, Inc. (HST): Free Stock Analysis Report Piedmont Realty Trust, Inc. (PDM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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