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.
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 Sanmina (SANM). SANM is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 17.12, while its industry has an average P/E of 18.64. SANM's Forward P/E has been as high as 18.20 and as low as 10.26, with a median of 12.95, all within the past year.
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. SANM has a P/S ratio of 0.79. This compares to its industry's average P/S of 0.93.
Finally, investors will want to recognize that SANM has a P/CF ratio of 16.93. 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. SANM's P/CF compares to its industry's average P/CF of 21.92. Within the past 12 months, SANM's P/CF has been as high as 17.73 and as low as 10.27, with a median of 12.92.
These are only a few of the key metrics included in Sanmina's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SANM looks like an impressive value stock at the moment.
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Sanmina Corporation (SANM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).