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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Devon Energy (DVN). DVN is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.15. This compares to its industry’s average Forward P/E of 9.84. Over the past year, DVN’s Forward P/E has been as high as 8.86 and as low as 5.57, with a median of 7.66.
Another valuation metric that we should highlight is DVN’s P/B ratio of 1.41. 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 company’s current P/B looks solid when compared to its industry’s average P/B of 2.96. Over the past year, DVN’s P/B has been as high as 2.02 and as low as 1.16, with a median of 1.50.
Investors could also keep in mind EOG Resources (EOG), another Oil and Gas – Exploration and Production – United States stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Shares of EOG Resources currently hold a Forward P/E ratio of 10.97, and its PEG ratio is 8.44. In comparison, its industry sports average P/E and PEG ratios of 9.84 and 0.95.
EOG’s price-to-earnings ratio has been as high as 12.84 and as low as 9.27, with a median of 11.23, while its PEG ratio has been as high as 9.88 and as low as 3.01, with a median of 3.68, all within the past year.
Additionally, EOG Resources has a P/B ratio of 2.17 while its industry’s price-to-book ratio sits at 2.96. For EOG, this valuation metric has been as high as 2.65, as low as 1.93, with a median of 2.32 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Devon Energy and EOG Resources are likely undervalued currently. And when considering the strength of its earnings outlook, DVN and EOG sticks out as one of the market’s strongest value stocks.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
