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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company to watch right now is CONMED (CNMD – Free Report) . CNMD is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.19, which compares to its industry’s average of 17.14. Over the past 52 weeks, CNMD’s Forward P/E has been as high as 31.12 and as low as 13, with a median of 15.41.
We also note that CNMD holds a PEG ratio of 0.74. 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. CNMD’s PEG compares to its industry’s average PEG of 1.94. Over the past 52 weeks, CNMD’s PEG has been as high as 1.09 and as low as 0.51, with a median of 0.71.
Investors should also recognize that CNMD has a P/B ratio of 2.27. The P/B ratio pits a stock’s market value against 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 4.56. CNMD’s P/B has been as high as 4.15 and as low as 2.05, with a median of 2.54, over the past year.
Finally, investors should note that CNMD has a P/CF ratio of 10.19. This metric takes into account a company’s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CNMD’s P/CF compares to its industry’s average P/CF of 18.44. CNMD’s P/CF has been as high as 24.89 and as low as 9.19, with a median of 13.12, all within the past year.
Another great Medical – Dental Supplies stock you could consider is McKesson (MCK – Free Report) , which is a # 2 (Buy) stock with a Value Score of A.
Shares of McKesson are currently trading at a forward earnings multiple of 16.24 and a PEG ratio of 1.15 compared to its industry’s P/E and PEG ratios of 17.14 and 1.94, respectively.
MCK’s price-to-earnings ratio has been as high as 19.54 and as low as 14.23, with a median of 16.92, while its PEG ratio has been as high as 1.65 and as low as 1.06, with a median of 1.32, all within the past year.
McKesson also has a P/B ratio of -27.89 compared to its industry’s price-to-book ratio of 4.56. Over the past year, its P/B ratio has been as high as -23.17, as low as -59.19, with a median of -41.94.
Value investors will likely look at more than just these metrics, but the above data helps show that CONMED and McKesson are likely undervalued currently. And when considering the strength of its earnings outlook, CNMD and MCK sticks out as one of the market’s strongest value stocks.
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