Owhile Zacks’ tried and true rankings emphasize earnings estimates and revisions to estimates to find strong stocks, we also know that investors tend to develop their own individual strategies. With that in mind, we always look at value, growth and momentum trends to uncover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation measures to find stocks that they believe are undervalued by the market as a whole.
Zacks developed the innovative Style Scores system to highlight stocks with specific characteristics. For example, value investors will be interested in stocks with good ratings in the “Value” category. When paired with a high Zacks rating, “A” ratings in the Value category are among the strongest value stocks in the market today.
One business value that investors might notice is Alpha and Omega Semiconductor (AOSL). AOSL currently holds a Zacks rank of No. 2 (buy) and a value rating of A. The stock has a forward P/E ratio of 13.97. This compares to its industry average Forward P/E of 20.44. AOSL’s Forward P/E has been as high as 20.63 and as low as 7.51, with a median of 11.05, all over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this measure because sales are more difficult to manipulate on an income statement. This means it could be a truer performance indicator. AOSL has a P/S ratio of 2.01. That compares to its industry average P/S of 3.35.
Finally, it should also be recognized that the AOSL has a P/CF ratio of 12.56. This data point considers a company’s operating cash flow and is frequently used to find companies that are undervalued given their strong cash flow outlook. AOSL’s P/CF compares to its industry average P/CF of 33.25. Over the past year, AOSL’s P/CF has been as high as 17.01 and as low as 6.10, with a median of 9.51.
Another great electronics – semiconductor stock you might consider is United Microelectronics (UMC)which is action #2 (buy) with a value score of A.
Shares of United Microelectronics currently hold a forward P/E ratio of 9.57 and its PEG ratio is 0.33. By comparison, its industry average P/E and PEG ratios are 20.44 and 0.78.
Over the past 12 months, UMC’s P/E has been as high as 20.05, as low as 8.65, with a median of 13.65, and its PEG ratio has been as high as 0.90 , as low as 0.30, with a median of 0.68.
Additionally, United Microelectronics holds a P/E ratio of 2.75 and the price-to-book ratio for its sector is 11.38. UMC’s P/B has been as high as 3.61, as low as 2.16, with a median of 2.85 over the past 12 months.
Value investors will likely scrutinize more than these metrics, but the data above helps show that Alpha and Omega Semiconductor and United Microelectronics are likely undervalued right now. And considering the strength of its earnings outlook, AOSL and UMC stand out as one of the strongest value stocks in the market.
The infrastructure stock boom will sweep America
A massive push to rebuild America’s crumbling infrastructure will soon be underway. It is bipartisan, urgent and inevitable. Billions will be spent. Fortunes will be made.
The only question is “Are you going to get into good stocks early when their growth potential is greatest?”
Zacks released a special report to help you do just that, and today it’s free. Discover 5 special companies looking to make the most of building and repairing roads, bridges and buildings, as well as transporting goods and transforming energy on an almost unimaginable scale.
Download FREE: How to Leverage Trillions of Dollars in Infrastructure Spending >>
Click to get this free report
Alpha and Omega Semiconductor Limited (AOSL): Free Stock Analysis Report
United Microelectronics Corporation (UMC): Free Inventory Analysis Report
To read this article on Zacks.com, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.