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 Arrow Electronics (ARW). ARW is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 9.44, while its industry has an average P/E of 14.06. Over the past 52 weeks, ARW's Forward P/E has been as high as 11.05 and as low as 8.04, with a median of 9.71.
ARW is also sporting a PEG ratio of 0.46. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ARW's PEG compares to its industry's average PEG of 0.46. Over the last 12 months, ARW's PEG has been as high as 0.55 and as low as 0.40, with a median of 0.49.
Another notable valuation metric for ARW is its P/B ratio of 0.98. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.04. Over the past 12 months, ARW's P/B has been as high as 1.22 and as low as 0.78, with a median of 1.02.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARW has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.49.
Finally, investors will want to recognize that ARW has a P/CF ratio of 9.63. 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. This stock's P/CF looks attractive against its industry's average P/CF of 17.76. ARW's P/CF has been as high as 11.55 and as low as 8.13, with a median of 10.03, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Arrow Electronics is likely undervalued currently. And when considering the strength of its earnings outlook, ARW sticks out as one of the market's strongest value stocks.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Arrow Electronics, Inc. (ARW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).