Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Pharmaceuticals industry for Thursday, June 27, 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.

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 91, which is considered to be undervalued.

When you look at Clever Leaves Holdings Inc’s price-to-sales ratio at 0.29 compared to the industry median at 2.43, this company has a lower price relative to revenue compared to its peers. This could make Clever Leaves Holdings Inc’s stock more attractive for value investors.

Now, let’s assess Clever Leaves Holdings Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 0.2, when compared to the industry median of 11.0, 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. Clever Leaves Holdings Inc’s shareholder yield is lower than its industry median ratio of (3.82%). 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. Clever Leaves Holdings Inc’s price-to-book ratio is lower than its industry median ratio of 2.29. This could make Clever Leaves Holdings Inc more attractive to investors looking for a new addition to their portfolio.

Processa Pharmaceuticals Inc’s Value Grade

Value Grade:

Processa Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on utilizing its regulatory science approach, including the principles associated with food and drug administration (FDA’s) Project Optimus Oncology initiative and the related FDA Draft Guidance, in the development of Next Generation Chemotherapy (NGC) oncology drug products. The three NGC treatments in its pipeline are NGC-Capecitabine (NGC-Cap), PCS3117, also referred to as NGC-Gemcitabine (NGC-Gem) and PCS11T, also referred to as NGC-Irinotecan (NGC-Iri). NGC-Cap is a combination of PCS6422 and capecitabine, capecitabine being the oral prodrug of the cancer drug 5-fluorouracil. PCS3117 is an oral analog of gemcitabine that is converted to its active metabolite by a different enzyme system than gemcitabine, resulting in a positive response in gemcitabine patients and some gemcitabine treatment-resistant patients. PCS11T is a prodrug of the active metabolite of irinotecan (SN-38).

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.

Processa Pharmaceuticals Inc has a Value Score of 70, which is considered to be undervalued.

Processa Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Processa Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 2.29.

You can read more about Processa 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.

Qilian International Holding Group Ltd’s Value Grade

Value Grade:

Qilian International Holding Group Ltd is a China-based company mainly engaged in the development, manufacture, marketing and sale of licorice products, oxytetracycline products, traditional Chinese medicine derivatives (TCMD) product, heparin product, sausage casings and fertilizers. The Company operates through three segments: Oxytetracycline & Licorice Products and TCMD segment, Fertilizer segment and Heparin Products and Sausage Casing segment. Its main brand is Qilian Shan. The Company principally operates its businesses within the domestic market.

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.

Qilian International Holding Group Ltd has a Value Score of 89, which is considered to be undervalued.

Qilian International Holding Group Ltd’s price-to-book ratio is higher than its peers. This could make Qilian International Holding Group Ltd less attractive for value investors when compared to the industry median at 2.29.

You can read more about Qilian International Holding Group 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.

China SXT Pharmaceuticals Inc’s Value Grade

Value Grade:

China SXT Pharmaceuticals Inc is a China-based pharmaceutical company that focuses on the research, development, manufacture, marketing and sales of Traditional Chinese Medicine Pieces (TCMP). The Company develops, manufactures and sells three types of TCMP products: advanced TCMP, fine TCMP and regular TCMP, and TCM Homologous Supplements (TCMHS) products. The Company sells its TCMP products under three brand names such as Suxuangtang, Hui Chun Tang and Tong Ren Tang. Most of its products are sold on a prescription basis across China.

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.

China SXT Pharmaceuticals Inc has a Value Score of 100, which is considered to be undervalued.

China SXT Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make China SXT Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 2.29.

You can read more about China SXT 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.

TRACON Pharmaceuticals Inc’s Value Grade

Value Grade:

TRACON Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on the development and commercialization of novel targeted therapeutics for cancer and utilizing its contract research organization (CRO) independent product development platform to partner with other life science companies to develop and commercialize products in the United States. The Company’s clinical-stage oncology product candidate is TRC102, which is a small molecule that has been studied in Phase 1 and Phase 2 trials for the treatment of mesothelioma, lung cancer, glioblastoma and solid tumors and YH001, which is a monospecific investigational cytotoxic T-lymphocyte-associated protein 4 (CTLA-4) antibody. TRC102 is a small molecule in clinical development to reverse resistance to specific chemotherapeutics by inhibiting DNA base excision repair (BER). Its clinical-stage product candidate, Envafolimab, is a PD-L1 antibody that is being developed for the treatment of sarcoma.

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.

TRACON Pharmaceuticals Inc has a Value Score of 71, which is considered to be undervalued.

TRACON Pharmaceuticals Inc’s price-earnings ratio is 2.2 compared to the industry median at 21.8. This means that it has a lower price relative to its earnings compared to its peers. This makes TRACON Pharmaceuticals Inc more attractive for value investors.

You can read more about TRACON 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.

Tonix Pharmaceuticals Holding Corp’s Value Grade

Value Grade:

Tonix Pharmaceuticals Holding Corp. is a biopharmaceutical company focused on developing, licensing and commercializing therapeutics to treat and prevent human disease and alleviate suffering. Its development portfolio is focused on central nervous system (CNS) disorders. Its product candidates include Tonmya (TNX-102 SL), TNX-102 SL, TNX-1300, TNX-2900, TNX-1900, TNX-1500, TNX-801 and TNX-1800. TNX-102 SL is for the management of fibromyalgia. Its CNS portfolio includes TNX-1300 (cocaine esterase), a biologic designed to treat cocaine intoxication that has a therapy designation. Its immunology development portfolio consists of biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500, which is a humanized monoclonal antibody targeting CD40-ligand being developed for the prevention of allograft rejection and for the treatment of autoimmune diseases. It markets Zembrace SymTouch (sumatriptan injection) 3 mg and Tosymra (sumatriptan nasal spray) 10 mg.

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.

Tonix Pharmaceuticals Holding Corp has a Value Score of 70, which is considered to be undervalued.

Tonix Pharmaceuticals Holding Corp’s price-to-book ratio is higher than its peers. This could make Tonix Pharmaceuticals Holding Corp less attractive for value investors when compared to the industry median at 2.29.

You can read more about Tonix Pharmaceuticals Holding 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.

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 6 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.

• Clever Leaves Holdings Inc stock has a Value Grade of A.
• Processa Pharmaceuticals Inc stock has a Value Grade of B.
• Qilian International Holding Group Ltd stock has a Value Grade of A.
• China SXT Pharmaceuticals Inc stock has a Value Grade of A.
• TRACON Pharmaceuticals Inc stock has a Value Grade of B.
• Tonix Pharmaceuticals Holding Corp stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Pharmaceuticals Stocks for Thursday, June 27
• 5 Undervalued Pharmaceuticals Stocks for Wednesday, June 26
• Why Emergent Biosolutions Inc’s (EBS) Stock Is Down 4.79%
• Why Hims & Hers Health Inc’s (HIMS) Stock Is Down 6.91%

AAII Disclaimer

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