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Are Investors Undervaluing These Oils-Energy Stocks Right Now?

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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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Galp Energia (GLPEY - Free Report) is a stock many investors are watching right now. GLPEY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 10.53 right now. For comparison, its industry sports an average P/E of 12.89. GLPEY's Forward P/E has been as high as 24.23 and as low as 8.96, with a median of 13.68, all within the past year.

Finally, investors should note that GLPEY has a P/CF ratio of 13.62. 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. GLPEY's P/CF compares to its industry's average P/CF of 24.56. Over the past year, GLPEY's P/CF has been as high as 149.16 and as low as -16.86, with a median of 12.34.

Phillips 66 (PSX - Free Report) may be another strong Oil and Gas - Refining and Marketing stock to add to your shortlist. PSX is a # 2 (Buy) stock with a Value grade of A.

Phillips 66 is trading at a forward earnings multiple of 10.78 at the moment, with a PEG ratio of 0.56. This compares to its industry's average P/E of 12.89 and average PEG ratio of 0.69.

PSX's price-to-earnings ratio has been as high as 27.30 and as low as 9.89, with a median of 16.46, while its PEG ratio has been as high as 3.90 and as low as 0.50, with a median of 0.81, all within the past year.

Furthermore, Phillips 66 holds a P/B ratio of 1.79 and its industry's price-to-book ratio is 1.34. PSX's P/B has been as high as 1.98, as low as 1.37, with a median of 1.66 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that Galp Energia and Phillips 66 are likely undervalued currently. And when considering the strength of its earnings outlook, GLPEY and PSX sticks out as one of the market's strongest value stocks.


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