Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 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 4 undervalued stocks in the Medical Equipment, Supplies & Distribution industry for Tuesday, July 02, 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.

Embecta Corp’s Value Grade

Value Grade:

Embecta Corp. is a global medical device company. The Company is focused on providing solutions to people living with diabetes. The Company has a portfolio of products, including a range of pen needles, syringes and safety injection devices, which are complemented by its digital application designed to assist people with managing their diabetes. Its pen needles are sterile, single-use, medical devices, designed to be used in conjunction with pen injectors that inject insulin or other diabetes medications. The Company also sells safety pen needles, which have shields on both ends of the cannula that automatically deploy after the injection to help prevent needlestick exposure and injury during injection and disposal. In addition to pen needles, it sells sterile, single-use insulin syringes, which are used to inject insulin drawn from insulin vials. It distributes its products through a variety of channels, including retail, hospitals, pharmacies and other institutional channels.

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.

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

When you look at Embecta Corp’s price-to-sales ratio at 0.62 compared to the industry median at 2.89, this company has a lower price relative to revenue compared to its peers. This could make Embecta Corp’s stock more attractive for value investors.

Embecta Corp’s price-earnings ratio is 9.99 compared to the industry median at 38.46. This means it has a lower share price relative to earnings compared to its peers. This could make Embecta Corp more attractive for value investors.

Now, let’s assess Embecta Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 8.1, when compared to the industry median of 17.2, 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. Embecta Corp’s shareholder yield is higher than its industry median ratio of (2.39%). 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.

OraSure Technologies, Inc.’s Value Grade

Value Grade:

OraSure Technologies, Inc. provides point-of-care and home diagnostic tests, sample management solutions, and microbiome laboratory and analytical services. The Company's product portfolio is divided into diagnostics products and sample management solutions. Its business consists of the development, manufacture, marketing and sale of diagnostic products and specimen collection devices using its technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types. Its diagnostic products include tests for diseases including COVID-19, HIV and Hepatitis C that are performed on a rapid basis at the point of care, and tests for drugs of abuse that are processed in a laboratory. Its business also includes molecular sample management solutions and services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers.

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.

OraSure Technologies, Inc. has a Value Score of 85, which is considered to be undervalued.

OraSure Technologies, Inc.’s price-earnings ratio is 14.0 compared to the industry median at 38.5. This means that it has a lower price relative to its earnings compared to its peers. This makes OraSure Technologies, Inc. more attractive for value investors.

OraSure Technologies, Inc.’s price-to-book ratio is higher than its peers. This could make OraSure Technologies, Inc. less attractive for value investors when compared to the industry median at 2.43.

You can read more about OraSure Technologies, 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.

Retractable Technologies Inc’s Value Grade

Value Grade:

Retractable Technologies, Inc. is engaged in manufacturing and marketing of safety medical products (predominately syringes) for the healthcare industry. The Company is focused on the production of injection devices (syringes and needles). Such products are marketed under the VanishPoint, Patient Safe, and EasyPoint brands. The VanishPoint syringe, blood collection, and IV catheter products are designed to prevent needlestick injuries and product reuse by retracting the needle directly from the patient, effectively reducing exposure to the contaminated needle. Patient Safe syringes are designed to reduce the risk of bloodstream infections resulting from catheter hub contamination. The EasyPoint is a retractable needle that can be used with luer lock syringes, luer slip syringes, and prefilled syringes to give injections. The EasyPoint needle can also be used to aspirate fluids and for blood collection. Its products are distributed by various specialty and general line distributors.

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.

Retractable Technologies Inc has a Value Score of 87, which is considered to be undervalued.

Retractable Technologies Inc’s price-to-book ratio is higher than its peers. This could make Retractable Technologies Inc less attractive for value investors when compared to the industry median at 2.43.

You can read more about Retractable Technologies 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.

Sonendo Inc’s Value Grade

Value Grade:

Sonendo, Inc. is a commercial-stage medical technology company focused on saving teeth from tooth decay. The Company develops and manufactures the GentleWave System, a technology platform designed to treat tooth decay by cleaning and disinfecting the microscopic spaces within teeth without the need to remove tooth structure. The system utilizes a mechanism of action, which combines procedure fluid optimization, broad-spectrum acoustic energy, and advanced fluid dynamics, to debride and disinfect deep regions of the complex root canal system in a less invasive procedure that preserves tooth structure. Its Product segment includes the sales of the GentleWave System console and related accessories and instruments. The Company also offers ancillary products, such as SoundSeal and its Sonendo-branded liquid solution of ethylenediaminetetraacetic acid (EDTA). SoundSeal is a material used during the GentleWave Procedure to build and create a sealing platform on the top of the crown.

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.

Sonendo Inc has a Value Score of 92, which is considered to be undervalued.

Sonendo Inc’s price-to-book ratio is higher than its peers. This could make Sonendo Inc less attractive for value investors when compared to the industry median at 2.43.

You can read more about Sonendo 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 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 4 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.

• Embecta Corp stock has a Value Grade of A.
• OraSure Technologies, Inc. stock has a Value Grade of A.
• Retractable Technologies Inc stock has a Value Grade of A.
• Sonendo Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Medical Equipment, Supplies & Distribution Stocks for Tuesday, July 02
• 4 Undervalued Medical Equipment, Supplies & Distribution Stocks for Monday, July 01
• Summer Portfolio Refresher: Swapping Five Shadow Stocks
• Why 10X Genomics Inc’s (TXG) Stock Is Down 4.42%

AAII Disclaimer

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