Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 stock to keep an eye on is Eldorado Gold (EGO). EGO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.19, while its industry has an average P/E of 14.22. Over the past 52 weeks, EGO's Forward P/E has been as high as 16.53 and as low as 7.84, with a median of 11.30.
Investors should also note that EGO holds a PEG ratio of 0.30. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EGO's industry currently sports an average PEG of 0.51. Within the past year, EGO's PEG has been as high as 4.91 and as low as 0.26, with a median of 0.31.
Investors should also recognize that EGO has a P/B ratio of 1. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.67. EGO's P/B has been as high as 1.05 and as low as 0.71, with a median of 0.89, over the past year.
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. EGO has a P/S ratio of 2.87. This compares to its industry's average P/S of 3.24.
Finally, we should also recognize that EGO has a P/CF ratio of 6.78. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. EGO's P/CF compares to its industry's average P/CF of 9.73. EGO's P/CF has been as high as 8.96 and as low as 5.08, with a median of 6.27, all within the past year.
Galiano Gold (GAU) may be another strong Mining - Gold stock to add to your shortlist. GAU is a # 2 (Buy) stock with a Value grade of A.
Galiano Gold also has a P/B ratio of 1.43 compared to its industry's price-to-book ratio of 1.67. Over the past year, its P/B ratio has been as high as 2.08, as low as 1.07, with a median of 1.48.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Eldorado Gold and Galiano Gold are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EGO and GAU feels like a great value stock at the moment.
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Eldorado Gold Corporation (EGO): Free Stock Analysis Report Galiano Gold Inc. (GAU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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