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.
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.
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 to watch right now is Pan American Silver (PAAS). PAAS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for PAAS is its P/B ratio of 1.71. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. PAAS's current P/B looks attractive when compared to its industry's average P/B of 1.73. Within the past 52 weeks, PAAS's P/B has been as high as 2.10 and as low as 1.46, with a median of 1.72.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PAAS has a P/S ratio of 2.79. This compares to its industry's average P/S of 3.57.
Finally, we should also recognize that PAAS has a P/CF ratio of 9.35. 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 12.69. PAAS's P/CF has been as high as 23.64 and as low as 8.81, with a median of 18.29, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Pan American Silver is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PAAS feels like a great value stock at the moment.
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
Pan American Silver Corp. (PAAS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
