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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One stock to keep an eye on is BlackRock TCP Capital (TCPC). TCPC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.24, which compares to its industry's average of 8.68. TCPC's Forward P/E has been as high as 6.82 and as low as 4.93, with a median of 6.06, all within the past year.
Another notable valuation metric for TCPC is its P/B ratio of 0.76. Investors use the P/B ratio to look at a stock's market value versus 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 0.79. TCPC's P/B has been as high as 1.03 and as low as 0.70, with a median of 0.85, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. TCPC has a P/S ratio of 1.45. This compares to its industry's average P/S of 3.22.
Value investors will likely look at more than just these metrics, but the above data helps show that BlackRock TCP Capital is likely undervalued currently. And when considering the strength of its earnings outlook, TCPC sticks out as one of the market's strongest value stocks.
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BLACKROCK TCP CAPITAL CORP. (TCPC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).