Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
OSI Systems (OSIS) is a stock many investors are watching right now. OSIS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 14.90, while its industry has an average P/E of 18.61. OSIS’s Forward P/E has been as high as 19.16 and as low as 14.90, with a median of 17.56, all within the past year.
Investors should also note that OSIS holds a PEG ratio of 1.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. OSIS’s industry currently sports an average PEG of 1.63. Within the past year, OSIS’s PEG has been as high as 2.13 and as low as 1.35, with a median of 1.94.
Another notable valuation metric for OSIS is its P/B ratio of 2.61. The P/B ratio pits a stock’s market value against 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 4.17. Over the past 12 months, OSIS’s P/B has been as high as 3.06 and as low as 2.56, with a median of 2.82.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. OSIS has a P/S ratio of 1.39. This compares to its industry’s average P/S of 1.8.
Finally, we should also recognize that OSIS has a P/CF ratio of 12.27. This metric focuses on a firm’s operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 20.01. Over the past 52 weeks, OSIS’s P/CF has been as high as 16.20 and as low as 12.27, with a median of 14.47.
TDK (TTDKY) may be another strong Electronics – Miscellaneous Components stock to add to your shortlist. TTDKY is a # 1 (Strong Buy) stock with a Value grade of A.
TDK is currently trading with a Forward P/E ratio of 14.78 while its PEG ratio sits at 0.98. Both of the company’s metrics compare favorably to its industry’s average P/E of 18.61 and average PEG ratio of 1.63.
TTDKY’s Forward P/E has been as high as 21.85 and as low as 12.21, with a median of 16.07. During the same time period, its PEG ratio has been as high as 1.27, as low as 0.50, with a median of 0.75.
Furthermore, TDK holds a P/B ratio of 1.67 and its industry’s price-to-book ratio is 4.17. TTDKY’s P/B has been as high as 2.55, as low as 1.35, with a median of 1.77 over the past 12 months.
These are only a few of the key metrics included in OSI Systems and TDK strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, OSIS and TTDKY look like an impressive value stock at the moment.
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