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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Global Ship Lease (GSL). GSL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Another valuation metric that we should highlight is GSL's P/B ratio of 0.58. 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 1.59. GSL's P/B has been as high as 0.84 and as low as 0.56, with a median of 0.63, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GSL has a P/S ratio of 1.16. This compares to its industry's average P/S of 1.17.
Finally, investors will want to recognize that GSL has a P/CF ratio of 1.80. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 4.39. Within the past 12 months, GSL's P/CF has been as high as 2.53 and as low as 1.66, with a median of 1.94.
Value investors will likely look at more than just these metrics, but the above data helps show that Global Ship Lease is likely undervalued currently. And when considering the strength of its earnings outlook, GSL sticks out at as one of the market's strongest value stocks.
Zacks Names #1 Semiconductor Stock
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