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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
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 to watch right now is STMicroelectronics (STM). STM is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 16.64 right now. For comparison, its industry sports an average P/E of 22.76. STM's Forward P/E has been as high as 29.34 and as low as 11.78, with a median of 16.69, all within the past year.
STM is also sporting a PEG ratio of 0.58. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. STM's industry currently sports an average PEG of 0.95. Within the past year, STM's PEG has been as high as 4.37 and as low as 0.58, with a median of 3.08.
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. STM has a P/S ratio of 1.28. This compares to its industry's average P/S of 1.39.
These are just a handful of the figures considered in STMicroelectronics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that STM is an impressive value stock right now.
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STMicroelectronics N.V. (STM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).