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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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
Dow (DOW - Free Report) is a stock many investors are watching right now. DOW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.51, while its industry has an average P/E of 11.13. Over the past year, DOW's Forward P/E has been as high as 12.32 and as low as 6.35, with a median of 8.87.
Investors will also notice that DOW has a PEG ratio of 0.28. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DOW's industry currently sports an average PEG of 0.68. Within the past year, DOW's PEG has been as high as 0.44 and as low as 0.21, with a median of 0.31.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DOW has a P/S ratio of 0.84. This compares to its industry's average P/S of 0.86.
Finally, investors will want to recognize that DOW has a P/CF ratio of 5.11. 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. DOW's current P/CF looks attractive when compared to its industry's average P/CF of 7.13. Within the past 12 months, DOW's P/CF has been as high as 10.93 and as low as 4.54, with a median of 5.08.
Methanex (MEOH - Free Report) may be another strong Chemical - Diversified stock to add to your shortlist. MEOH is a # 1 (Strong Buy) stock with a Value grade of A.
Additionally, Methanex has a P/B ratio of 1.54 while its industry's price-to-book ratio sits at 2.26. For MEOH, this valuation metric has been as high as 2.15, as low as 1.34, with a median of 1.73 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Dow and Methanex are likely undervalued currently. And when considering the strength of its earnings outlook, DOW and MEOH sticks out as one of the market's strongest value stocks.
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Should Value Investors Buy Dow (DOW) Stock?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
Dow (DOW - Free Report) is a stock many investors are watching right now. DOW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.51, while its industry has an average P/E of 11.13. Over the past year, DOW's Forward P/E has been as high as 12.32 and as low as 6.35, with a median of 8.87.
Investors will also notice that DOW has a PEG ratio of 0.28. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DOW's industry currently sports an average PEG of 0.68. Within the past year, DOW's PEG has been as high as 0.44 and as low as 0.21, with a median of 0.31.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DOW has a P/S ratio of 0.84. This compares to its industry's average P/S of 0.86.
Finally, investors will want to recognize that DOW has a P/CF ratio of 5.11. 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. DOW's current P/CF looks attractive when compared to its industry's average P/CF of 7.13. Within the past 12 months, DOW's P/CF has been as high as 10.93 and as low as 4.54, with a median of 5.08.
Methanex (MEOH - Free Report) may be another strong Chemical - Diversified stock to add to your shortlist. MEOH is a # 1 (Strong Buy) stock with a Value grade of A.
Additionally, Methanex has a P/B ratio of 1.54 while its industry's price-to-book ratio sits at 2.26. For MEOH, this valuation metric has been as high as 2.15, as low as 1.34, with a median of 1.73 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Dow and Methanex are likely undervalued currently. And when considering the strength of its earnings outlook, DOW and MEOH sticks out as one of the market's strongest value stocks.