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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One stock to keep an eye on is Cardinal Health (CAH – Free Report) . CAH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 14.31 right now. For comparison, its industry sports an average P/E of 18.71. CAH’s Forward P/E has been as high as 15.59 and as low as 12.37, with a median of 14.12, all within the past year.
Investors will also notice that CAH has a PEG ratio of 1.40. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. CAH’s PEG compares to its industry’s average PEG of 2.12. CAH’s PEG has been as high as 1.55 and as low as 0.86, with a median of 1.08, all within the past year.
Finally, our model also underscores that CAH has a P/CF ratio of 14.45. 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. This stock’s P/CF looks attractive against its industry’s average P/CF of 18.14. Within the past 12 months, CAH’s P/CF has been as high as 27.97 and as low as 13.22, with a median of 17.87.
Another great Medical – Dental Supplies stock you could consider is CONMED (CNMD – Free Report) , which is a # 2 (Buy) stock with a Value Score of A.
Shares of CONMED are currently trading at a forward earnings multiple of 14.35 and a PEG ratio of 0.75 compared to its industry’s P/E and PEG ratios of 18.71 and 2.12, respectively.
CNMD’s Forward P/E has been as high as 31.46 and as low as 13, with a median of 15.49. During the same time period, its PEG ratio has been as high as 1.10, as low as 0.51, with a median of 0.71.
Additionally, CONMED has a P/B ratio of 2.29 while its industry’s price-to-book ratio sits at 4.47. For CNMD, this valuation metric has been as high as 4.32, as low as 2.05, with a median of 2.56 over the past year.
These are just a handful of the figures considered in Cardinal Health and CONMED’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CAH and CNMD is an impressive value stock right now.
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