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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Deutsche Lufthansa (DLAKY). DLAKY is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.29 right now. For comparison, its industry sports an average P/E of 14.89. Over the past year, DLAKY's Forward P/E has been as high as 7.66 and as low as 4.15, with a median of 5.02.
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. DLAKY has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.54.
Investors could also keep in mind Frontier Group (ULCC), an Transportation - Airline stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Shares of Frontier Group are currently trading at a forward earnings multiple of 6.88 and a PEG ratio of 0.23 compared to its industry's P/E and PEG ratios of 14.89 and 0.81, respectively.
ULCC's Forward P/E has been as high as 148.72 and as low as 4.55, with a median of 11.43. During the same time period, its PEG ratio has been as high as 0.25, as low as 0.23, with a median of 0.23.
Frontier Group also has a P/B ratio of 2.48 compared to its industry's price-to-book ratio of 4.47. Over the past year, its P/B ratio has been as high as 3.75, as low as 1.22, with a median of 2.59.
Value investors will likely look at more than just these metrics, but the above data helps show that Deutsche Lufthansa and Frontier Group are likely undervalued currently. And when considering the strength of its earnings outlook, DLAKY and ULCC sticks out as one of the market's strongest value stocks.