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 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.
One company to watch right now is Adecco (AHEXY). AHEXY is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 10.27. This compares to its industry's average Forward P/E of 19.10. Over the past year, AHEXY's Forward P/E has been as high as 13.91 and as low as 6.97, with a median of 9.93.
Investors will also notice that AHEXY has a PEG ratio of 1.35. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AHEXY's industry currently sports an average PEG of 1.90. Within the past year, AHEXY's PEG has been as high as 1.71 and as low as 1.31, with a median of 1.42.
Finally, investors will want to recognize that AHEXY has a P/CF ratio of 9.37. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.70. Within the past 12 months, AHEXY's P/CF has been as high as 10.82 and as low as 5.50, with a median of 7.08.
Investors could also keep in mind Cap Gemini (CGEMY), an Outsourcing stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Cap Gemini is currently trading with a Forward P/E ratio of 14.85 while its PEG ratio sits at 1.78. Both of the company's metrics compare favorably to its industry's average P/E of 19.10 and average PEG ratio of 1.90.
CGEMY's Forward P/E has been as high as 19.04 and as low as 13.47, with a median of 16.08. During the same time period, its PEG ratio has been as high as 1.88, as low as 1.12, with a median of 1.38.
Furthermore, Cap Gemini holds a P/B ratio of 3.08 and its industry's price-to-book ratio is 14. CGEMY's P/B has been as high as 3.57, as low as 2.69, with a median of 3.15 over the past 12 months.
These are only a few of the key metrics included in Adecco and Cap Gemini strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, AHEXY and CGEMY look like an impressive value stock at the moment.
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