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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Green Dot (GDOT) is a stock many investors are watching right now. GDOT is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.12, which compares to its industry's average of 22.46. Over the past year, GDOT's Forward P/E has been as high as 9.32 and as low as 4.21, with a median of 6.76.
Finally, investors should note that GDOT has a P/CF ratio of 7.89. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.79. Over the past 52 weeks, GDOT's P/CF has been as high as 25.01 and as low as 4.91, with a median of 10.48.
PagSeguro Digital (PAGS) may be another strong Financial Transaction Services stock to add to your shortlist. PAGS is a Zacks Rank of #2 (Buy) stock with a Value grade of A.
Shares of PagSeguro Digital are currently trading at a forward earnings multiple of 7.12 and a PEG ratio of 0.63 compared to its industry's P/E and PEG ratios of 22.46 and 1.65, respectively.
Over the past year, PAGS's P/E has been as high as 9.72, as low as 4.84, with a median of 6.55; its PEG ratio has been as high as 0.69, as low as 0.33, with a median of 0.46 during the same time period.
Additionally, PagSeguro Digital has a P/B ratio of 1.21 while its industry's price-to-book ratio sits at 8.69. For PAGS, this valuation metric has been as high as 1.75, as low as 0.76, with a median of 1.06 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Green Dot and PagSeguro Digital are likely undervalued currently. And when considering the strength of its earnings outlook, GDOT and PAGS sticks out as one of the market's strongest value stocks.
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Green Dot Corporation (GDOT): Free Stock Analysis Report PagSeguro Digital Ltd. (PAGS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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