Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Medical Equipment, Supplies & Distribution industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Medical Equipment, Supplies & Distribution Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Medical Equipment, Supplies & Distribution Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Medical Equipment, Supplies & Distribution industry for Tuesday, March 26, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Medical Equipment, Supplies & Distribution industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Adapthealth Corp’s Value Grade

Value Grade:

Adapthealth Corp. provides patient-centered, healthcare-at-home solutions, including home medical equipment (HME), medical supplies and related services. The Company is primarily focused on providing sleep therapy equipment, supplies and related services, including CPAP and bi PAP services to individuals suffering from obstructive sleep apnea (OSA); medical devices and supplies to patients for the treatment of diabetes, including continuous glucose monitors (CGM) and insulin pumps; home medical equipment to patients discharged from acute care and other facilities; oxygen and related chronic therapy services in the home; and other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. The Company services beneficiaries of Medicare, Medicaid, and commercial insurance payors. It serves patients annually in all 50 states through its network of approximately 680 locations in 47 states.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Adapthealth Corp has a Value Score of 89, which is considered to be undervalued.

When you look at Adapthealth Corp’s price-to-sales ratio at 0.47 compared to the industry median at 2.77, this company has a lower price relative to revenue compared to its peers. This could make Adapthealth Corp’s stock more attractive for value investors.

Now, let’s assess Adapthealth Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 5.0, when compared to the industry median of 17.3, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Adapthealth Corp’s shareholder yield is higher than its industry median ratio of (1.98%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Adapthealth Corp’s price-to-book ratio is lower than its industry median ratio of 2.64. This could make Adapthealth Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Adapthealth Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Adapthealth Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 38.34. This could make Adapthealth Corp more attractive because the lower P/FCF ratio indicates that Adapthealth Corp is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Alpha Pro Tech, Ltd.’s Value Grade

Value Grade:

Alpha Pro Tech, Ltd. is a Canada-based company, which is engaged in developing, manufacturing and marketing a line of protective apparel garments, face masks and face shields and a line of construction weatherization building products for the housing market. Its products are sold both under the Alpha Pro Tech brand name as well as under private labels. Its products are classified into two business segments: The Building Supply segment, and The Disposable Protective Apparel segment. The Building Supply segment consists of construction weatherization products, such as house wrap and synthetic roof underlayment, as well as other woven materials. The Disposable Protective Apparel segment consists of a head-to-toe disposable protective garment (shoe covers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields. It serves the markets such as pharmaceuticals, biopharmaceuticals, medical device manufacturing, lab animal research, construction supply and more.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Alpha Pro Tech, Ltd. has a Value Score of 78, which is considered to be undervalued.

Alpha Pro Tech, Ltd.’s price-earnings ratio is 17.5 compared to the industry median at 39.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Alpha Pro Tech, Ltd. more attractive for value investors.

Alpha Pro Tech, Ltd.’s price-to-book ratio is higher than its peers. This could make Alpha Pro Tech, Ltd. less attractive for value investors when compared to the industry median at 2.64.

You can read more about Alpha Pro Tech, Ltd.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Meihua International Medical Tech Co Ltd’s Value Grade

Value Grade:

Meihua International Medical Technologies Co Ltd is a manufacturer of medical consumables. The Company operates its business through subsidiaries, focusing on the research and development, manufacturing and sales of Class I, II and III disposable medical devices. The Company's products include self-manufactured and out-sourced products. The Company's Class I disposable medical devices mainly include, such as, disposable medical X-ray films, medical dry films, dry laser imagers, gauze bandages, examination gloves, pharmaceutical packaging materials and containers and so on. Class II disposable medical devices, such as, disposable full anesthesia kits, medical brush, woman’s examination kits, urethral catheterization kits, gynecological examination kits, endotracheal intubation, medical masks, anal bags, and suction connecting tube and so on. Class III disposable medical devices, such as disposable infusion pumps, anesthesia puncture kits, electronic pumps, etc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Meihua International Medical Tech Co Ltd has a Value Score of 93, which is considered to be undervalued.

Meihua International Medical Tech Co Ltd’s price-earnings ratio is 2.8 compared to the industry median at 39.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Meihua International Medical Tech Co Ltd more attractive for value investors.

Meihua International Medical Tech Co Ltd’s price-to-book ratio is higher than its peers. This could make Meihua International Medical Tech Co Ltd less attractive for value investors when compared to the industry median at 2.64.

You can read more about Meihua International Medical Tech Co Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Medical Equipment, Supplies & Distribution Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Medical Equipment, Supplies & Distribution stocks as well as other industrys.

Choosing Which of the 3 Best Medical Equipment, Supplies & Distribution Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Adapthealth Corp stock has a Value Grade of A.
• Alpha Pro Tech, Ltd. stock has a Value Grade of B.
• Meihua International Medical Tech Co Ltd stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Medical Equipment, Supplies & Distribution industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Medical Equipment, Supplies & Distribution Stocks

Want to learn more about Medical Equipment, Supplies & Distribution stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Medical Equipment, Supplies & Distribution Stocks for Tuesday, March 26
• 4 Undervalued Medical Equipment, Supplies & Distribution Stocks for Monday, March 25
• Why Bioventus Inc’s (BVS) Stock Is Down 5.70%
• Why CVRx Inc’s (CVRX) Stock Is Down 7.81%

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