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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Lsb Industries (LXU) is a stock many investors are watching right now. LXU is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another valuation metric that we should highlight is LXU's P/B ratio of 1.31. 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 3.83. Within the past 52 weeks, LXU's P/B has been as high as 1.38 and as low as 0.97, with a median of 1.14.
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. LXU has a P/S ratio of 1.26. This compares to its industry's average P/S of 1.3.
Finally, we should also recognize that LXU has a P/CF ratio of 10.61. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.38. Over the past year, LXU's P/CF has been as high as 11.15 and as low as 5.52, with a median of 7.27.
Value investors will likely look at more than just these metrics, but the above data helps show that Lsb Industries is likely undervalued currently. And when considering the strength of its earnings outlook, LXU sticks out at as one of the market's strongest value stocks.
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