Should Value Investors Buy Chatham Lodging Trust REIT (CLDT) Stock?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Chatham Lodging Trust REIT (CLDT) is a stock many investors are watching right now. CLDT is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 6.77, which compares to its industry's average of 16.55. Over the past year, CLDT's Forward P/E has been as high as 8.70 and as low as 5.56, with a median of 7.10.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CLDT has a P/S ratio of 2.07. This compares to its industry's average P/S of 3.96.

Investors could also keep in mind Piedmont Realty Trust, Inc. (PDM), another REIT and Equity Trust - Other stock with a Zacks Rank of #2 (Buy) and Value grade of A.

Additionally, Piedmont Realty Trust, Inc. has a P/B ratio of 0.72 while its industry's price-to-book ratio sits at 1.96. For PDM, this valuation metric has been as high as 0.84, as low as 0.46, with a median of 0.63 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Chatham Lodging Trust REIT and Piedmont Realty Trust, Inc. are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CLDT and PDM feels like a great value stock at the moment.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research