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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is Open Text (OTEX). OTEX is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.9, which compares to its industry's average of 22.05. OTEX's Forward P/E has been as high as 9.13 and as low as 5.61, with a median of 7.17, all within the past year.
We should also highlight that OTEX has a P/B ratio of 2.4. 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. OTEX's current P/B looks attractive when compared to its industry's average P/B of 6.23. Within the past 52 weeks, OTEX's P/B has been as high as 2.44 and as low as 1.45, with a median of 1.82.
Finally, our model also underscores that OTEX has a P/CF ratio of 8.67. 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. OTEX's current P/CF looks attractive when compared to its industry's average P/CF of 15.59. Over the past 52 weeks, OTEX's P/CF has been as high as 8.83 and as low as 4.55, with a median of 6.00.
Progress Software (PRGS) may be another strong Computer - Software stock to add to your shortlist. PRGS is a Zacks Rank of #2 (Buy) stock with a Value grade of A.
Shares of Progress Software currently hold a Forward P/E ratio of 7.46, and its PEG ratio is 1.49. In comparison, its industry sports average P/E and PEG ratios of 22.05 and 1.40.
PRGS's price-to-earnings ratio has been as high as 14.46 and as low as 7.37, with a median of 10.95, while its PEG ratio has been as high as 7.23 and as low as 1.47, with a median of 2.21, all within the past year.
Furthermore, Progress Software holds a P/B ratio of 4.00 and its industry's price-to-book ratio is 6.23. PRGS's P/B has been as high as 7.05, as low as 3.95, with a median of 5.89 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Open Text and Progress Software are likely undervalued currently. And when considering the strength of its earnings outlook, OTEX and PRGS sticks out as one of the market's strongest value stocks.
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Open Text Corporation (OTEX): Free Stock Analysis Report
Progress Software Corporation (PRGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).