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.
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.
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.
The Hanover Insurance Group (THG) is a stock many investors are watching right now. THG is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 10.86 right now. For comparison, its industry sports an average P/E of 26.48. Over the past 52 weeks, THG's Forward P/E has been as high as 13.52 and as low as 10.12, with a median of 11.25.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. THG has a P/S ratio of 1.12. This compares to its industry's average P/S of 1.3.
Another great Insurance - Property and Casualty stock you could consider is The Travelers Companies (TRV), which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.
The Travelers Companies is trading at a forward earnings multiple of 11.60 at the moment, with a PEG ratio of 2.87. This compares to its industry's average P/E of 26.48 and average PEG ratio of 3.15.
TRV's price-to-earnings ratio has been as high as 14.64 and as low as 11.13, with a median of 12.44, while its PEG ratio has been as high as 4.80 and as low as 1.01, with a median of 2.83, all within the past year.
Additionally, The Travelers Companies has a P/B ratio of 2.11 while its industry's price-to-book ratio sits at 1.41. For TRV, this valuation metric has been as high as 2.22, as low as 1.85, with a median of 2.07 over the past year.
These are just a handful of the figures considered in The Hanover Insurance Group and The Travelers Companies's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that THG and TRV is an impressive value stock right now.
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The Hanover Insurance Group, Inc. (THG): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).