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Zacks

Should Value Investors Buy These Computer and Technology Stocks?

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.

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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

One company value investors might notice is Canon (CAJ). CAJ is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 12.55 right now. For comparison, its industry sports an average P/E of 13.97. Over the past year, CAJ's Forward P/E has been as high as 25.97 and as low as 11.05, with a median of 16.88.

CAJ is also sporting a PEG ratio of 12.55. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CAJ's PEG compares to its industry's average PEG of 13.97. Within the past year, CAJ's PEG has been as high as 25.97 and as low as 11.05, with a median of 16.88.

Finally, we should also recognize that CAJ has a P/CF ratio of 6.50. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 7.46. Within the past 12 months, CAJ's P/CF has been as high as 8.65 and as low as 5.68, with a median of 6.90.

Investors could also keep in mind Seiko Epson (SEKEY), an Office Automation and Equipment stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Additionally, Seiko Epson has a P/B ratio of 1.39 while its industry's price-to-book ratio sits at 0.89. For SEKEY, this valuation metric has been as high as 1.68, as low as 1.14, with a median of 1.38 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Canon and Seiko Epson are likely undervalued currently. And when considering the strength of its earnings outlook, CAJ and SEKEY sticks out as one of the market's strongest value stocks.


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Canon, Inc. (CAJ): Free Stock Analysis Report
 
Seiko Epson Corp. (SEKEY): Free Stock Analysis Report
 
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