The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is BorgWarner (BWA). BWA is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.26, which compares to its industry's average of 19.03. Over the last 12 months, BWA's Forward P/E has been as high as 9.34 and as low as 5.66, with a median of 7.41.
We should also highlight that BWA has a P/B ratio of 1.58. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.54. Over the past 12 months, BWA's P/B has been as high as 1.58 and as low as 0.93, with a median of 1.21.
Finally, investors will want to recognize that BWA has a P/CF ratio of 10.64. 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. BWA's P/CF compares to its industry's average P/CF of 29.06. Within the past 12 months, BWA's P/CF has been as high as 10.69 and as low as 4.57, with a median of 6.56.
Strattec Security (STRT) may be another strong Automotive - Original Equipment stock to add to your shortlist. STRT is a Zacks Rank of #1 (Strong Buy) stock with a Value grade of A.
Shares of Strattec Security currently hold a Forward P/E ratio of 16.18, and its PEG ratio is 1.62. In comparison, its industry sports average P/E and PEG ratios of 19.03 and 1.05.
Over the last 12 months, STRT's P/E has been as high as 20.21, as low as 8.54, with a median of 13.89, and its PEG ratio has been as high as 2.02, as low as 0.85, with a median of 1.39.
Furthermore, Strattec Security holds a P/B ratio of 1.19 and its industry's price-to-book ratio is 3.54. STRT's P/B has been as high as 1.38, as low as 0.58, with a median of 0.77 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that BorgWarner and Strattec Security are likely undervalued currently. And when considering the strength of its earnings outlook, BWA and STRT sticks out as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BorgWarner Inc. (BWA): Free Stock Analysis Report Strattec Security Corporation (STRT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
