The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 The Gap (GAP). GAP is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.90. This compares to its industry's average Forward P/E of 18.89. Over the past 52 weeks, GAP's Forward P/E has been as high as 21.56 and as low as 9.98, with a median of 12.89.
Another valuation metric that we should highlight is GAP's P/B ratio of 2.82. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 6.63. Over the past year, GAP's P/B has been as high as 4.07 and as low as 2.48, with a median of 2.92.
Finally, we should also recognize that GAP has a P/CF ratio of 6.79. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. GAP's current P/CF looks attractive when compared to its industry's average P/CF of 17.37. Within the past 12 months, GAP's P/CF has been as high as 12.76 and as low as 5.85, with a median of 7.09.
These are only a few of the key metrics included in The Gap's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, GAP looks like an impressive value stock at the moment.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpThe Gap, Inc. (GAP) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
