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.
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.
One stock to keep an eye on is
DLH (DLHC)
. DLHC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another valuation metric that we should highlight is DLHC’s P/B ratio of 3.13. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks solid versus its industry’s average P/B of 3.18. DLHC’s P/B has been as high as 3.34 and as low as 2.08, with a median of 2.33, over the past year.
Finally, we should also recognize that DLHC has a P/CF ratio of 12.35. 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. DLHC’s current P/CF looks attractive when compared to its industry’s average P/CF of 21.71. DLHC’s P/CF has been as high as 13.16 and as low as 8.11, with a median of 9.15, all within the past year.
Investors could also keep in mind
Randstad Holding (RANJY)
, an Staffing Firms stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Additionally, Randstad Holding has a P/B ratio of 2.32 while its industry’s price-to-book ratio sits at 3.18. For RANJY, this valuation metric has been as high as 2.86, as low as 2.06, with a median of 2.46 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that DLH and Randstad Holding are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DLHC and RANJY feels like a great value stock at the moment.
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