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 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.
One stock to keep an eye on is BorgWarner (BWA). BWA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 9.26 right now. For comparison, its industry sports an average P/E of 19.06. BWA's Forward P/E has been as high as 9.34 and as low as 5.66, with a median of 7.41, all within the past year.
We should also highlight that BWA has a P/B ratio of 1.58. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. BWA's current P/B looks attractive when compared to its industry's average P/B of 3.45. Over the past 12 months, BWA's P/B has been as high as 1.58 and as low as 0.93, with a median of 1.21.
Finally, investors will want to recognize that BWA has a P/CF ratio of 10.64. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BWA's current P/CF looks attractive when compared to its industry's average P/CF of 30.45. Over the past 52 weeks, BWA's P/CF has been as high as 10.69 and as low as 4.57, with a median of 6.56.
Magna International (MGA) may be another strong Automotive - Original Equipment stock to add to your shortlist. MGA is a Zacks Rank of #1 (Strong Buy) stock with a Value grade of A.
Magna International is trading at a forward earnings multiple of 8.47 at the moment, with a PEG ratio of 0.94. This compares to its industry's average P/E of 19.06 and average PEG ratio of 1.02.
MGA's price-to-earnings ratio has been as high as 8.47 and as low as 5.65, with a median of 6.79, while its PEG ratio has been as high as 0.94 and as low as 0.46, with a median of 0.60, all within the past year.
Additionally, Magna International has a P/B ratio of 1.03 while its industry's price-to-book ratio sits at 3.45. For MGA, this valuation metric has been as high as 1.05, as low as 0.71, with a median of 0.93 over the past year.
These are only a few of the key metrics included in BorgWarner and Magna International strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, BWA and MGA look like an impressive value stock at the moment.
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BorgWarner Inc. (BWA): Free Stock Analysis Report
Magna International Inc. (MGA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).