While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 stock to keep an eye on is Kaiser Aluminum (KALU). KALU is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 15.87, while its industry has an average P/E of 20.36. KALU's Forward P/E has been as high as 26.64 and as low as 11.50, with a median of 14.31, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KALU has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.73.
Finally, we should also recognize that KALU has a P/CF ratio of 6.18. 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. KALU's P/CF compares to its industry's average P/CF of 19.95. Over the past 52 weeks, KALU's P/CF has been as high as 10.36 and as low as 4.97, with a median of 7.32.
These are just a handful of the figures considered in Kaiser Aluminum's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that KALU is an impressive value stock right now.
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Kaiser Aluminum Corporation (KALU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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