While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
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.
One stock to keep an eye on is Atlanticus (ATLC). ATLC is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.89, which compares to its industry's average of 9.92. Over the past year, ATLC's Forward P/E has been as high as 12.46 and as low as 6.34, with a median of 8.26.
We should also highlight that ATLC has a P/B ratio of 1.9. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.03. Over the past year, ATLC's P/B has been as high as 2.08 and as low as 1.11, with a median of 1.54.
Finally, our model also underscores that ATLC has a P/CF ratio of 9.19. 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. ATLC's current P/CF looks attractive when compared to its industry's average P/CF of 24.89. Within the past 12 months, ATLC's P/CF has been as high as 9.96 and as low as 4.95, with a median of 6.94.
Value investors will likely look at more than just these metrics, but the above data helps show that Atlanticus is likely undervalued currently. And when considering the strength of its earnings outlook, ATLC sticks out as one of the market's strongest value stocks.
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Atlanticus Holdings Corporation (ATLC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).