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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.
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 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.
Tuya (TUYA) is a stock many investors are watching right now. TUYA is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 12.49, which compares to its industry's average of 35.35. Over the last 12 months, TUYA's Forward P/E has been as high as 46 and as low as 10.83, with a median of 19.44.
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. TUYA has a P/S ratio of 2.87. This compares to its industry's average P/S of 3.95.
Value investors will likely look at more than just these metrics, but the above data helps show that Tuya is likely undervalued currently. And when considering the strength of its earnings outlook, TUYA sticks out at as one of the market's strongest value stocks.
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