Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Chatham Lodging Trust REIT (CLDT). CLDT is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 6.77, which compares to its industry's average of 16.80. Over the last 12 months, CLDT's Forward P/E has been as high as 8.70 and as low as 5.56, with a median of 7.10.
Value investors also use the P/S ratio. The P/S ratio 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. CLDT has a P/S ratio of 1.57. This compares to its industry's average P/S of 3.93.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Chatham Lodging Trust REIT is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CLDT feels like a great value stock at the moment.
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Chatham Lodging Trust (REIT) (CLDT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).