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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Billiton (BBL). BBL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.23, which compares to its industry’s average of 7.27. Over the past year, BBL’s Forward P/E has been as high as 14.06 and as low as 6.12, with a median of 10.25.
Another valuation metric that we should highlight is BBL’s P/B ratio of 1.19. The P/B ratio pits a stock’s market value against 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 3.49. Within the past 52 weeks, BBL’s P/B has been as high as 1.32 and as low as 0.78, with a median of 1.10.
These are just a handful of the figures considered in Billiton’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BBL is an impressive value stock right now.
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