Should Value Investors Buy These Basic Materials Stocks?
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...
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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Centerra Gold (CGAU) is a stock many investors are watching right now. CGAU is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 8.77, while its industry has an average P/E of 14.46. Over the past 52 weeks, CGAU's Forward P/E has been as high as 12.08 and as low as 3.22, with a median of 8.03.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CGAU has a P/S ratio of 1.99. This compares to its industry's average P/S of 2.18.
If you're looking for another solid Mining - Gold value stock, take a look at Eldorado Gold (EGO). EGO is a # 2 (Buy) stock with a Value score of A.
Shares of Eldorado Gold currently holds a Forward P/E ratio of 11.74, and its PEG ratio is 2.35. In comparison, its industry sports average P/E and PEG ratios of 14.46 and 1.91.
EGO's Forward P/E has been as high as 21.21 and as low as 10.15, with a median of 12.90. During the same time period, its PEG ratio has been as high as 4.24, as low as 2.03, with a median of 2.58.
Eldorado Gold sports a P/B ratio of 0.45 as well; this compares to its industry's price-to-book ratio of 1.14. In the past 52 weeks, EGO's P/B has been as high as 0.68, as low as 0.37, with a median of 0.49.
Value investors will likely look at more than just these metrics, but the above data helps show that Centerra Gold and Eldorado Gold are likely undervalued currently. And when considering the strength of its earnings outlook, CGAU and EGO sticks out as one of the market's strongest value stocks.
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Centerra Gold Inc. (CGAU): Free Stock Analysis Report
Eldorado Gold Corporation (EGO): Free Stock Analysis Report
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