Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Pharmaceuticals industry for Wednesday, May 22, 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.

Aadi Bioscience Inc’s Value Grade

Value Grade:

Aadi Bioscience, Inc. is a commercial-stage biopharmaceutical company. The Company is focused on developing and commercializing precision therapies for cancers with alterations in the mammalian target of rapamycin (mTOR) pathway, a regulator of cell growth and cancer progression. Its lead drug product, FYARRO, is an mTOR inhibitor indicated for the treatment of adult patients with locally advanced unresectable or metastatic malignant perivascular epithelioid cell tumor (PEComa). FYARRO is a form of sirolimus bound to albumin. Sirolimus is a potent inhibitor of the mTOR biological pathway and inhibits downstream signaling from mTOR, which can promote tumor growth. FYARRO is composed of nanoparticles of sirolimus bound to human albumin with an average size less than 100 nanometers. It has also initiated a tumor-agnostic Phase II study (PRECISION 1) of FYARRO in patients with Tuberous Sclerosis Complex 1 and 2 (TSC1 and TSC2) alterations.

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.

Aadi Bioscience Inc has a Value Score of 64, which is considered to be undervalued.

When you look at Aadi Bioscience Inc’s price-to-sales ratio at 2.09 compared to the industry median at 2.38, this company has a lower price relative to revenue compared to its peers. This could make Aadi Bioscience Inc’s stock more attractive for value investors.

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. Aadi Bioscience Inc’s shareholder yield is higher than its industry median ratio of (3.13%). 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. Aadi Bioscience Inc’s price-to-book ratio is lower than its industry median ratio of 2.49. This could make Aadi Bioscience Inc more attractive to investors looking for a new addition to their portfolio.

Bon Natural Life Ltd’s Value Grade

Value Grade:

Bon Natural Life Ltd is a China-based company principally engaged in the manufacturing and sales of personal care ingredients, such as plant extracted fragrance compounds to perfume and fragrance manufacturers, natural health supplements, such as powder drinks and bioactive food ingredient products mostly used as food additives and nutritional supplements. The Company's product categories include fragrance compounds, health supplements (natural, functional active ingredients for powder drinks) and bioactive food ingredients. Fragrance compounds product category includes clary sage extract products. Bioactive food ingredients include stachyose, milk thistle extracts, apple extracts, phloretin and pomegranate extract products. The Company’s products are applied in the functional food, personal care, cosmetic and pharmaceutical industries.

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.

Bon Natural Life Ltd has a Value Score of 96, which is considered to be undervalued.

Bon Natural Life Ltd’s price-earnings ratio is 0.6 compared to the industry median at 23.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Bon Natural Life Ltd more attractive for value investors.

Bon Natural Life Ltd’s price-to-book ratio is higher than its peers. This could make Bon Natural Life Ltd less attractive for value investors when compared to the industry median at 2.49.

You can read more about Bon Natural Life 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.

CASI Pharmaceuticals Inc’s Value Grade

Value Grade:

CASI Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on developing and commercializing therapeutics and pharmaceutical products in China, the United States, and throughout the world. The Company is focused on acquiring, developing, and commercializing products that augment its hematology oncology therapeutic focus as well as other areas of unmet medical need. Its commercial product, EVOMELA, is an intravenous formulation of melphalan commercialized by Acrotech in the multiple myeloma treatment setting in the United States. Its pipeline products include CNCT19 (CD19 CAR-T), BI-1206 (anti- FcYRIIB antibody), CB-5339 (VCP/p97 inhibitor), CID-103 (Anti-CD38 Mab), Thiotepa, and Octreotide LAI. The Company’s Food and Drug Administration (FDA)-approved generic products for the China market include Entecavir tablets, Tenofovir disoproxil fumarate (TDF) tablets, Cilostazol tablets-50mg, Cilostazol tablets-100mg, Ondansetron HCL tablets, and Tizanidine tablets.

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.

CASI Pharmaceuticals Inc has a Value Score of 61, which is considered to be undervalued.

CASI Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make CASI Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 2.49.

You can read more about CASI 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.

Emergent Biosolutions Inc’s Value Grade

Value Grade:

Emergent BioSolutions, Inc. is a life sciences company. It is focused on providing preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threats. Its solutions include a product portfolio, a product development portfolio, and a Bioservices portfolio. Its segments include Commercial Products, MCM Products, and Services Segment. Commercial Products segment include NARCAN (naloxone HCl). MCM Products segment consists of its Anthrax - MCM, Smallpox - MCM and Other Products. Services segment consisting of its Bioservices offerings. NARCAN (naloxone HCl) Nasal Spray, an intranasal formulation of naloxone is developed for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression. Its portfolio of Bioservices consists of three but interrelated service pillars, such as development services (process and analytical development) and drug substance manufacturing.

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.

Emergent Biosolutions Inc has a Value Score of 83, which is considered to be undervalued.

Emergent Biosolutions Inc’s price-to-book ratio is higher than its peers. This could make Emergent Biosolutions Inc less attractive for value investors when compared to the industry median at 2.49.

You can read more about Emergent Biosolutions 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.

Natural Alternatives International, Inc.’s Value Grade

Value Grade:

Natural Alternatives International, Inc. is a formulator, manufacturer and marketer of nutritional supplements. The Company operates through two segments: Private-label contract manufacturing, and Royalty, licensing, and raw material. The Private-label contract manufacturing segment primarily provides manufacturing services to companies that market and distribute nutritional supplements and other health care products. Royalty, licensing, and raw material segment associated with the sale and license of beta-alanine under the Company’s CarnoSyn and SR CarnoSyn trademarks. The Company provides private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal and other nutritional supplements as well as other health care products. It private-label contract manufacturing customers include companies that market nutritional supplements through direct sales marketing channels, direct to consumer e-commerce channels, and retail stores.

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.

Natural Alternatives International, Inc. has a Value Score of 77, which is considered to be undervalued.

Natural Alternatives International, Inc.’s price-to-book ratio is higher than its peers. This could make Natural Alternatives International, Inc. less attractive for value investors when compared to the industry median at 2.49.

You can read more about Natural Alternatives International, 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.

Procyon Corp’s Value Grade

Value Grade:

Procyon Corporation operates through its subsidiaries AMERX Health Care Corporation (AMERX) and Sirius Medical Supply, Inc. (Sirius). AMERX develops and markets proprietary medical products used in the treatment of pressure ulcers, stasis ulcers, wounds, dermatitis, inflammation and other skin problems. Its product lines include AMERX, AMERIGEL, HELIX3 Bioactive Collagen, EXTREMIT-EASE Compression Garment and Advantagen Surgical Collagen. AMERX markets a line of AMERIGEL advanced skin and wound care products made with Oakin, that promote healing in wound and problematic skin conditions, including AMERIGEL Hydrogel Wound Dressing, AMERIGEL Post Op Surgical Kits, AMERIGEL Saline Wound Wash, AMERIGEL Care Lotion, and AMERIGEL Barrier Lotion. HELIX3 is available in Collagen Powder and Collagen Matrix. Its wound care product includes AMERX Calcium Alginate Dressing, AMERX Foam Dressing, AMERX Gauze Dressing, AMERX Hyrdocolloid Dressing, and AMERX Wound Care Kits.

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.

Procyon Corp has a Value Score of 87, which is considered to be undervalued.

Procyon Corp’s price-to-book ratio is higher than its peers. This could make Procyon Corp less attractive for value investors when compared to the industry median at 2.49.

You can read more about Procyon 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.

Perrigo Company PLC’s Value Grade

Value Grade:

Perrigo Company plc is an Ireland-based provider of over the counter (OTC) health and wellness solutions that are designed to enhance individual well-being. The Company's segments include Consumer Self-Care Americas (CSCA) and Consumer Self-Care International (CSCI). The CSCA segment comprises its consumer self-care business (OTC, infant formula, and oral care categories, and contract manufacturing) in the United States and Canada, including the HRA Pharma self-care business (Women's Health and Skin-Care categories) in the United States and Canada. The CSCI segment comprises its consumer self-care business in Europe and Australia, which are primarily branded, its store brand business in the United Kingdom and parts of Europe and Asia and includes the HRA Pharma self-care business (Women's Health, Skin-Care and Rare-Disease categories) in Europe. Its product categories include Upper Respiratory, Pain and Sleep-Aids, Skincare and Personal Hygiene, Digestive Health, Nutrition and others.

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.

Perrigo Company PLC has a Value Score of 61, which is considered to be undervalued.

Perrigo Company PLC’s price-to-book ratio is higher than its peers. This could make Perrigo Company PLC less attractive for value investors when compared to the industry median at 2.49.

You can read more about Perrigo Company PLC’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 7 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.

• Aadi Bioscience Inc stock has a Value Grade of B.
• Bon Natural Life Ltd stock has a Value Grade of A.
• CASI Pharmaceuticals Inc stock has a Value Grade of B.
• Emergent Biosolutions Inc stock has a Value Grade of A.
• Natural Alternatives International, Inc. stock has a Value Grade of B.
• Procyon Corp stock has a Value Grade of A.
• Perrigo Company PLC stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 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 Wednesday, May 22
• Which Is a Better Investment, Amneal Pharmaceuticals Inc or Catalent Inc Stock?
• Which Is a Better Investment, Catalent Inc or Immunocore Holdings PLC - ADR Stock?
• 7 Undervalued Pharmaceuticals Stocks for Tuesday, May 21

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