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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
WhiteHorse Finance (WHF) is a stock many investors are watching right now. WHF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 7.51 right now. For comparison, its industry sports an average P/E of 9.72. WHF's Forward P/E has been as high as 8.03 and as low as 5.83, with a median of 7.19, all within the past year.
We should also highlight that WHF has a P/B ratio of 0.86. 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 stock's P/B looks solid versus its industry's average P/B of 1.07. Over the past year, WHF's P/B has been as high as 0.98 and as low as 0.75, with a median of 0.90.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. WHF has a P/S ratio of 2.63. This compares to its industry's average P/S of 3.74.
These figures are just a handful of the metrics value investors tend to look at, but they help show that WhiteHorse Finance is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WHF feels like a great value stock at the moment.
Research Chief Names "Single Best Pick to Double"
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. 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.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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