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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Coty (COTY). COTY is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.95. This compares to its industry's average Forward P/E of 27.69. Over the past 52 weeks, COTY's Forward P/E has been as high as 21.98 and as low as 9.29, with a median of 12.81.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. COTY has a P/S ratio of 0.72. This compares to its industry's average P/S of 1.25.
Value investors will likely look at more than just these metrics, but the above data helps show that Coty is likely undervalued currently. And when considering the strength of its earnings outlook, COTY sticks out as one of the market's strongest value stocks.
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Coty (COTY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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