The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
NRG Energy (NRG) is a stock many investors are watching right now. NRG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 8.42, which compares to its industry’s average of 15.79. NRG’s Forward P/E has been as high as 13.06 and as low as 4.56, with a median of 6.95, all within the past year.
Another valuation metric that we should highlight is NRG’s P/B ratio of 1.87. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks solid versus its industry’s average P/B of 2.59. Over the past 12 months, NRG’s P/B has been as high as 4.39 and as low as 1.59, with a median of 2.42.
RWE AG (RWEOY) may be another strong Utility – Electric Power stock to add to your shortlist. RWEOY is a # 2 (Buy) stock with a Value grade of A.
RWE AG is currently trading with a Forward P/E ratio of 12.85 while its PEG ratio sits at 2.88. Both of the company’s metrics compare favorably to its industry’s average P/E of 15.79 and average PEG ratio of 2.20.
Over the past year, RWEOY’s P/E has been as high as 20.53, as low as 12.85, with a median of 18.07; its PEG ratio has been as high as 4.53, as low as 2.88, with a median of 0.19 during the same time period.
Furthermore, RWE AG holds a P/B ratio of 2.34 and its industry’s price-to-book ratio is 2.59. RWEOY’s P/B has been as high as 2.48, as low as 0.88, with a median of 1.27 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that NRG Energy and RWE AG are likely undervalued currently. And when considering the strength of its earnings outlook, NRG and RWEOY sticks out as one of the market’s strongest value stocks.
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