Subscribe to Entrepreneur for $5
Subscribe

Are These Consumer Discretionary Stocks Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...

By
This story originally appeared on Zacks

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.

- Zacks

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 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 stock to keep an eye on is Academy Sports and Outdoors (ASO). ASO is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

Investors should also note that ASO holds a PEG ratio of 0.48. 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. ASO's industry currently sports an average PEG of 0.79. Within the past year, ASO's PEG has been as high as 3.65 and as low as 0.41, with a median of 2.06.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ASO has a P/S ratio of 0.58. This compares to its industry's average P/S of 1.56.

If you're looking for another solid Leisure and Recreation Products value stock, take a look at Malibu Boats (MBUU). MBUU is a # 2 (Buy) stock with a Value score of A.

Additionally, Malibu Boats has a P/B ratio of 3.56 while its industry's price-to-book ratio sits at 10.57. For MBUU, this valuation metric has been as high as 6.16, as low as 3.21, with a median of 4.35 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Academy Sports and Outdoors and Malibu Boats are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ASO and MBUU feels like a great value stock at the moment.



Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How to Profit from Trillions on Spending for Infrastructure >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Academy Sports and Outdoors, Inc. (ASO): Free Stock Analysis Report

 

Malibu Boats, Inc. (MBUU): Free Stock Analysis Report

 

To read this article on Zacks.com click here.