Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Pharmaceuticals 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 Pharmaceuticals 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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5 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Pharmaceuticals industry for Monday, April 01, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Pharmaceuticals 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.

Bristol-Myers Squibb Co’s Value Grade

Value Grade:

Bristol-Myers Squibb Company is a biopharmaceutical company engaged in the discovery, development and delivering advanced medicines that help patients prevail over serious diseases. It offers products for various therapeutic classes, which includes oncology, hematology, immunology, cardiovascular and neuroscience. Its pharmaceutical products include chemically synthesized or small molecule drugs, products produced from biological processes, called biologics and chimeric antigen receptor (CAR-T) cell therapies. Small molecule drugs are typically administered orally in the form of a tablet or capsule, although other drug delivery mechanisms are used as well. Biologics are administered to patients through injections or by intravenous infusion. Its in-line products include Eliquis, Opdivo, Orencia, Pomalyst/Imnovid, Yervoy, Sprycel, Reblozyl, Opdualag, Abecma, Zeposia, and others. The Company's product pipeline includes Krazati, MRTX1719, RYZ101, KarXT, ORM-6151, and Repotrectinib.

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.

Bristol-Myers Squibb Co has a Value Score of 62, which is considered to be undervalued.

When you look at Bristol-Myers Squibb Co’s price-to-sales ratio at 2.44 compared to the industry median at 2.65, this company has a lower price relative to revenue compared to its peers. This could make Bristol-Myers Squibb Co’s stock more attractive for value investors.

Bristol-Myers Squibb Co’s price-earnings ratio is 14.06 compared to the industry median at 24.32. This means it has a lower share price relative to earnings compared to its peers. This could make Bristol-Myers Squibb Co more attractive for value investors.

Now, let’s assess Bristol-Myers Squibb Co’s EV/EBITDA ratio, also known as enterprise multiple. At 6.4, when compared to the industry median of 10.6, 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. Bristol-Myers Squibb Co’s shareholder yield is higher than its industry median ratio of (3.16%). 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. Bristol-Myers Squibb Co’s price-to-book ratio is higher than its industry median ratio of 2.01. This could make Bristol-Myers Squibb Co less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Bristol-Myers Squibb Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bristol-Myers Squibb Co’s price-to-free-cash-flow ratio is lower than its industry median ratio of 18.68. This could make Bristol-Myers Squibb Co more attractive because the lower P/FCF ratio indicates that Bristol-Myers Squibb Co 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.

Clever Leaves Holdings Inc’s Value Grade

Value Grade:

Clever Leaves Holdings Inc. is a multinational operator and licensed producer of pharmaceutical-grade cannabinoids. The Company's segments include Cannabinoid and Non-Cannabinoid. The Cannabinoid segment is comprised of cultivation, extraction, manufacturing, commercialization, and distribution of cannabinoid products. The Non-Cannabinoid operating segment is comprised of the brands and manufacturing assets acquired as part of its acquisition of Herbal Brands. The Non-Cannabinoid segment is engaged in the business of formulating, manufacturing, marketing, selling, distributing, and otherwise commercializing wellness products and nutraceuticals, excluding cannabinoid products. Its customers for the Herbal Brands products include specialty and health retailers, mass retailers and specialty and health stores in the United States. It offers product portfolio in two categories: nutraceuticals and cannabinoids. The nutraceutical products consist of a variety of beverage and powder products.

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.

Clever Leaves Holdings Inc has a Value Score of 76, which is considered to be undervalued.

Clever Leaves Holdings Inc’s price-to-book ratio is higher than its peers. This could make Clever Leaves Holdings Inc less attractive for value investors when compared to the industry median at 2.01.

You can read more about Clever Leaves Holdings Inc’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.

Cumberland Pharmaceuticals, Inc.’s Value Grade

Value Grade:

Cumberland Pharmaceuticals Inc. is a specialty pharmaceutical company. The Company is focused on the acquisition, development and commercialization of branded prescription pharmaceutical products. Its portfolio of brands includes Acetadote injection, for the treatment of acetaminophen poisoning; Caldolor injection, for the treatment of pain and fever, Kristalose for oral solution, a prescription laxative, for the treatment of constipation, and Omeclamox-Pak, oral, for the treatment of Helicobacter pylori infection and related duodenal ulcer disease. Its brands also include Sancuso transdermal, for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment; Vaprisol injection, to raise serum sodium levels in hospitalized patients with euvolemic and hypervolemic hyponatremia, and Vibativ injection for the treatment of certain serious bacterial infections, including hospital-acquired and ventilator-associated bacterial pneumonia.

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.

Cumberland Pharmaceuticals, Inc. has a Value Score of 94, which is considered to be undervalued.

Cumberland Pharmaceuticals, Inc.’s price-to-book ratio is higher than its peers. This could make Cumberland Pharmaceuticals, Inc. less attractive for value investors when compared to the industry median at 2.01.

You can read more about Cumberland Pharmaceuticals, Inc.’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.

IM Cannabis Corp’s Value Grade

Value Grade:

IM Cannabis Corp. is a Canada-based medical cannabis company. The Company operates in Israel through its commercial relationship with Focus Medical Herbs Ltd. (Focus Medical), which has a cultivation license to breed, grow and supply medical cannabis products in Israel. The Company also operates medical cannabis retail pharmacies, online platforms, distribution centres and logistical hubs in Israel. The Company operates through Adjupharm GmbH in Europe, which is a medical cannabis producer and distributor with wholesale, narcotics handling, manufacturing, procurement, storage, and distribution licenses granted by German regulatory authorities that allow for import/export capability with requisite permits. The Company operates through Trichome and its subsidiaries Trichome JWC Acquisition Corp. and MYM Nutraceuticals Inc., where it cultivates and processes cannabis for the adult-use market at its Ontario and Nova Scotia facilities under the WAGNERS and Highland Grow brands.

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.

IM Cannabis Corp has a Value Score of 88, which is considered to be undervalued.

IM Cannabis Corp’s price-to-book ratio is higher than its peers. This could make IM Cannabis Corp less attractive for value investors when compared to the industry median at 2.01.

You can read more about IM Cannabis Corp’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.

cbdMD Inc’s Value Grade

Value Grade:

cbdMD, Inc. produces and distributes cannabidiol (CBD) products. The Company owns and operates CBD brands cbdMD, Paw CBD and cbdMD Botanicals. Its cbdMD brand of products includes a range of premium every day and functional CBD products, including tinctures; gummies; topicals; capsules; drink mixes; and sleep, focus and calming aids.Its Paw CBD brand of products includes a line of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths and formulas. Its cbdMD Botanicals brand of beauty and skincare products features facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care stock-keeping units (SKU). cbdMD, Paw CBD and cbdMD Botanicals products are distributed through its e-commerce websites, third party ecommerce sites, select distributors and marketing partners as well as a variety of brick-and-mortar retailers. Its products are sold through www.cbdmd.com, www.pawcbd.com, and cbdmdbotanicals.com Websites.

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.

cbdMD Inc has a Value Score of 72, which is considered to be undervalued.

cbdMD Inc’s price-to-book ratio is higher than its peers. This could make cbdMD Inc less attractive for value investors when compared to the industry median at 2.01.

You can read more about cbdMD Inc’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 Pharmaceuticals 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 Pharmaceuticals stocks as well as other industrys.

Choosing Which of the 5 Best Pharmaceuticals 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.

• Bristol-Myers Squibb Co stock has a Value Grade of B.
• Clever Leaves Holdings Inc stock has a Value Grade of B.
• Cumberland Pharmaceuticals, Inc. stock has a Value Grade of A.
• IM Cannabis Corp stock has a Value Grade of A.
• cbdMD Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Pharmaceuticals 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 Pharmaceuticals Stocks

Want to learn more about Pharmaceuticals 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.

• 5 Undervalued Pharmaceuticals Stocks for Monday, April 01
• 7 Undervalued Pharmaceuticals Stocks for Friday, March 29
• 4 Undervalued Pharmaceuticals Stocks for Thursday, March 28
• Why Collegium Pharmaceutical Inc’s (COLL) Stock Is Down 5.11%

AAII Disclaimer

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