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 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 company value investors might notice is Talos Energy (TALO). TALO is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value.
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. TALO has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.79.
Value investors will likely look at more than just these metrics, but the above data helps show that Talos Energy is likely undervalued currently. And when considering the strength of its earnings outlook, TALO sticks out as one of the market's strongest value stocks.
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Talos Energy Inc. (TALO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).