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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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Mission Produce (AVO) is a stock many investors are watching right now. AVO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
We also note that AVO holds a PEG ratio of 1.24. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AVO's PEG compares to its industry's average PEG of 1.38. Over the past 52 weeks, AVO's PEG has been as high as 1.40 and as low as 1.22, with a median of 1.37.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AVO has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.74.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Mission Produce is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AVO feels like a great value stock at the moment.
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Mission Produce, Inc. (AVO) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).