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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Aspen Aerogels (ASPN). ASPN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ASPN has a P/S ratio of 0.95. This compares to its industry's average P/S of 1.52.
Finally, investors will want to recognize that ASPN has a P/CF ratio of 9.60. 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 stock's P/CF looks attractive against its industry's average P/CF of 12.31. Over the past year, ASPN's P/CF has been as high as 75.47 and as low as -332.05, with a median of 25.87.
These are only a few of the key metrics included in Aspen Aerogels's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ASPN looks like an impressive value stock at the moment.
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Aspen Aerogels, Inc. (ASPN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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