Which stocks should value investors buy now?

Investors interested in alternative energy – Other stocks are probably familiar with Chesapeake Energy (CHK) and TC Energy (TRP). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

The best way to find stocks that offer good value is to combine a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores evaluate companies based on specific traits.

Chesapeake Energy and TC Energy currently sport Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively. This system places emphasis on companies that have seen positive earnings estimate revisions. Investors should therefore feel confident that CHK’s earnings outlook is likely to improve on a larger scale. However, this is only one factor that value investors care about.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

The Style Score Value assessment incorporates a number of important fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and numerous other key statistics commonly used by value investors.

CHK currently has a forward P/E ratio of 6.31, while TRP has a forward P/E ratio of 15.65. We also note that CHK has a PEG ratio of 1.01. This figure is similar to the commonly used P/E ratio, with the PEG ratio also taking into account a company’s expected earnings growth rate. TRP currently has a PEG ratio of 3.91.

Another important valuation metric for CHK is its P/B ratio of 1.69. The P/B ratio compares a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, TRP has a P/B ratio of 2.17.

These and some other metrics help CHK to get a B rating, while TRP gets a C rating.

CHK stands out in both our Zacks Rank and Style Scores models from TRP, so value investors likely believe CHK is the better option right now.

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Chesapeake Energy Corporation (CHK): Free Stock Analysis Report

TC Energy Corporation (TRP): Free Stock Analysis Report

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