This story originally appeared on Zacks
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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company value investors might notice is Arrow Electronics (ARW). ARW is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
We also note that ARW holds a PEG ratio of 0.30. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. ARW’s industry currently sports an average PEG of 0.32. Over the past 52 weeks, ARW’s PEG has been as high as 162.35 and as low as 0.28, with a median of 0.45.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARW has a P/S ratio of 0.26. This compares to its industry’s average P/S of 0.31.
Finally, our model also underscores that ARW has a P/CF ratio of 6.69. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 12.18. Within the past 12 months, ARW’s P/CF has been as high as 10.39 and as low as 6.31, with a median of 8.13.
If you’re looking for another solid Electronics – Parts Distribution value stock, take a look at Avnet (AVT). AVT is a # 1 (Strong Buy) stock with a Value score of A.
Avnet is currently trading with a Forward P/E ratio of 7.06 while its PEG ratio sits at 0.25. Both of the company’s metrics compare favorably to its industry’s average P/E of 7.70 and average PEG ratio of 0.32.
Over the last 12 months, AVT’s P/E has been as high as 17.16, as low as 7.05, with a median of 11.62, and its PEG ratio has been as high as 0.84, as low as 0.25, with a median of 0.51.
Additionally, Avnet has a P/B ratio of 0.94 while its industry’s price-to-book ratio sits at 1.41. For AVT, this valuation metric has been as high as 1.13, as low as 0.86, with a median of 0.98 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Arrow Electronics and Avnet are likely undervalued currently. And when considering the strength of its earnings outlook, ARW and AVT sticks out as one of the market’s strongest value stocks.
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Arrow Electronics, Inc. (ARW): Free Stock Analysis Report
Avnet, Inc. (AVT): Free Stock Analysis Report
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