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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Stitch Fix (SFIX). SFIX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another notable valuation metric for SFIX is its P/B ratio of 2.61. 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. SFIX's current P/B looks attractive when compared to its industry's average P/B of 6.97. Over the past year, SFIX's P/B has been as high as 4.42 and as low as 1.19, with a median of 1.98.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SFIX has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.53.
Another great Retail - Apparel and Shoes stock you could consider is Urban Outfitters (URBN), which is a # 1 (Strong Buy) stock with a Value Score of A.
Urban Outfitters is trading at a forward earnings multiple of 12.60 at the moment, with a PEG ratio of 1.02. This compares to its industry's average P/E of 20.38 and average PEG ratio of 1.63.
URBN's price-to-earnings ratio has been as high as 13.39 and as low as 9.02, with a median of 11.21, while its PEG ratio has been as high as 1.13 and as low as 0.45, with a median of 0.83, all within the past year.
Furthermore, Urban Outfitters holds a P/B ratio of 2.06 and its industry's price-to-book ratio is 6.97. URBN's P/B has been as high as 2.07, as low as 1.40, with a median of 1.77 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Stitch Fix and Urban Outfitters are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SFIX and URBN feels like a great value stock at the moment.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
