3 Strong Buy Stocks With Great P/E Ratios

Despite the advent of robo-traders and algorithmic investing, many investors are still interested in targeting stocks that have solid traditional valuation metrics. Of these, companies with better-than-average P/E ratios are often targeted as potentially undervalued investment options.

The Price to Earnings ratio is calculated by dividing a company’s share price by its full-year earnings per share figure. It is the most commonly used valuation metric related to profits and is generally viewed as an effective method for contextualizing a company’s current earnings performance.

While the P/E ratio is just one piece of the larger picture for value investors, it will almost always come up in any conversation about finding an undervalued stock. The average P/E ratio in the S&P 500 is about 16, so value investors will typically target stocks with a lower figure than that—although this varies by industry.

With this said, value investors can also benefit from pairing the P/E ratio and the Zacks Rank. By targeting stocks with better-than-average P/Es and strong Zacks Ranks, one creates an effective strategy for finding undervalued stocks that are poised to outperform the market over the next one to three months.

Today, we’ve found three Zacks Rank #1 (Strong Buy) stocks with impressive P/E ratios. Check them out:

1. Arcelormittal (AS:MT) ( (NYSE:MT) )

Arcelormittal is the world’s largest steel producer. The company is currently sporting a P/E ratio of 7.79, which is better than its “Steel – Producers” industry average of 13.46. The stock also has an “A” grade for Value and better-than-industry-average P/S and P/B ratios. On top of this, MT has gained more than 37% over the past year, making it one of the better performing stocks in the “Basic Materials” sector. Based on our current Zacks Consensus Estimates, Arcelormittal is expected to post EPS growth of 128% and sales growth of 17% this year.

2. Ichor Holdings ( (NASDAQ:ICHR) )

Ichor is a leading provider of fluid delivery subsystems for the semiconductor manufacturing industry. With a P/E ratio of just 10.40, the company bests the “Electronics – Semiconductors” industry average of 22.51. Overall, the stock has a “B” grade for Value. In addition, ICHR is sporting an “A” grade for Growth, thanks in part to its projected EPS growth of 80%, as well as its projected sales growth of 59%. And with shares up over 128% year-to-date, Ichor has been one of 2017’s strongest stocks in the red-hot semiconductors space.

3. Micron Technology ( (NASDAQ:MU) )

Semiconductor memory giant Micron Technology has emerged as one of Wall Street’s most popular growth stocks over the past two years, but the stock is also an interesting value pick right now. The company is currently sporting a P/E ratio of 5.99, which is better than the “Computer and Technology” sector average of 23.71. Overall, MU has an “A” grade for Value and a weighted-average VGM grade of “A.” Based on our current Zacks Consensus Estimates, Micron is expected to post EPS growth of over 7,000% this fiscal year and a further 37% next fiscal year.

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