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, 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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
Amtech Systems (ASYS)
. ASYS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.84 right now. For comparison, its industry sports an average P/E of 27.56. Over the past year, ASYS’s Forward P/E has been as high as 153.48 and as low as 7.47, with a median of 11.91.
Another notable valuation metric for ASYS is its P/B ratio of 1.59. The P/B ratio is used to compare a stock’s market value with 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 4.29. Over the past year, ASYS’s P/B has been as high as 1.90 and as low as 1.01, with a median of 1.49.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ASYS has a P/S ratio of 1.51. This compares to its industry’s average P/S of 1.66.
Finally, investors should note that ASYS has a P/CF ratio of 9.77. 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. ASYS’s P/CF compares to its industry’s average P/CF of 15.11. Over the past 52 weeks, ASYS’s P/CF has been as high as 52.78 and as low as 6.20, with a median of 20.61.
STMicroelectronics (STM)
may be another strong Semiconductor – General stock to add to your shortlist. STM is a # 2 (Buy) stock with a Value grade of A.
STMicroelectronics is trading at a forward earnings multiple of 10.07 at the moment, with a PEG ratio of 2.01. This compares to its industry’s average P/E of 27.56 and average PEG ratio of 3.14.
STM’s Forward P/E has been as high as 25.01 and as low as 7.91, with a median of 11.39. During the same time period, its PEG ratio has been as high as 5, as low as 1.58, with a median of 2.28.
Furthermore, STMicroelectronics holds a P/B ratio of 3.17 and its industry’s price-to-book ratio is 4.29. STM’s P/B has been as high as 5.31, as low as 2.47, with a median of 3.44 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Amtech Systems and STMicroelectronics are likely undervalued currently. And when considering the strength of its earnings outlook, ASYS and STM sticks out as one of the market’s strongest value stocks.
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