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 Tuesday, July 09, 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.

Amylyx Pharmaceuticals Inc’s Value Grade

Value Grade:

Amylyx Pharmaceuticals, Inc. is a commercial-stage biopharmaceutical company. The Company is engaged in the discovery and development of treatments for neurodegenerative diseases. The Company is focused on the development and commercialization of its product candidate, AMX0035 (sodium phenylbutyrate and taurursodiol, also known as ursodoxicoltaurine) for the treatment of amyotrophic lateral sclerosis (ALS). RELYVRIO (also known as AMX0035), an oral, fixed-dose combination of sodium phenylbutyrate and taurursodiol is approved to treat ALS in adults in the United States. AMX0035 is a dual unfolded protein response (UPR)-Bax apoptosis inhibitor composed of PB and TURSO (also known as TUDCA). Its development of antisense oligonucleotides (ASOs), including lead ASO AMX0114, which targets calpain-2 (CAPN2), a gene encoding calcium-dependent proteolytic enzyme which has been implicated in the pathogenesis of ALS and other neurodegenerative diseases.

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.

Amylyx Pharmaceuticals Inc has a Value Score of 95, which is considered to be undervalued.

When you look at Amylyx Pharmaceuticals Inc’s price-to-sales ratio at 0.28 compared to the industry median at 2.57, this company has a lower price relative to revenue compared to its peers. This could make Amylyx Pharmaceuticals Inc’s stock more attractive for value investors.

Now, let’s assess Amylyx Pharmaceuticals Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 1.8, when compared to the industry median of 11.4, 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. Amylyx Pharmaceuticals Inc’s shareholder yield is higher than its industry median ratio of (3.61%). 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. Amylyx Pharmaceuticals Inc’s price-to-book ratio is lower than its industry median ratio of 2.33. This could make Amylyx Pharmaceuticals Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Amylyx Pharmaceuticals Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Amylyx Pharmaceuticals Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 20.81. This could make Amylyx Pharmaceuticals Inc more attractive because the lower P/FCF ratio indicates that Amylyx Pharmaceuticals Inc 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.

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 0.5 compared to the industry median at 24.1. 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 2.33.

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.

LifeVantage Corp’s Value Grade

Value Grade:

LifeVantage Corporation is engaged in the identification, research, development, formulation and sale of advanced nutrigenomic activators, dietary supplements, nootropics, pre- and pro-biotics, weight management, skin and hair care, bath and body, and targeted relief products. The Company's dietary supplements include its flagship Protandim family of products, LifeVantage Omega+, ProBio, IC Bright, and Daily Wellness dietary supplements. The Protandim product line includes Protandim NRF1 Synergizer, Protandim Nrf2 Synergizer, and Protandim NAD Synergizer. TrueScience is its line of skin, hair, bath and body, and targeted relief products. The Company also markets and sells Petandim, its companion pet supplement formulated to combat oxidative stress in dogs; Axio, its nootropic energy drink mixes, and PhysIQ, its smartweight management system, which includes PhysIQ Fat Burn and PhysIQ Prebiotic, all formulated to aid in weight management.

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.

LifeVantage Corp has a Value Score of 67, which is considered to be undervalued.

LifeVantage Corp’s price-earnings ratio is 19.7 compared to the industry median at 24.1. This means that it has a lower price relative to its earnings compared to its peers. This makes LifeVantage Corp more attractive for value investors.

LifeVantage Corp’s price-to-book ratio is lower than its peers. This could make LifeVantage Corp more attractive for value investors when compared to the industry median at 2.33.

You can read more about LifeVantage 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.

Pacira Biosciences Inc’s Value Grade

Value Grade:

Pacira BioSciences, Inc. is a holding company for Pacira Pharmaceuticals, Inc. The Company's non-opioid treatments include EXPAREL (bupivacaine liposome injectable suspension), which is a long-acting, local analgesic for postsurgical pain management; ZILRETTA (triamcinolone acetonide extended-release injectable suspension), which is an extended-release, intra-articular (IA), corticosteroid injection indicated for OA knee pain, and Iovera, which is a novel handheld device for delivering immediate, long-acting, drug-free pain control using precise, controlled doses of cold temperature to a targeted nerve. EXPAREL is used across multiple orthopedic procedures, including joint reconstruction, shoulder, spine, extremity procedures, and hip fractures. It is developing interventions to address debilitating conditions involving the sympathetic nervous system, such as cardiac electrical storm, chronic pain. Its clinical development programs include PCRX-201, and pMVL-Based Clinical Program.

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.

Pacira Biosciences Inc has a Value Score of 64, which is considered to be undervalued.

Pacira Biosciences Inc’s price-earnings ratio is 15.9 compared to the industry median at 24.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Pacira Biosciences Inc more attractive for value investors.

Pacira Biosciences Inc’s price-to-book ratio is higher than its peers. This could make Pacira Biosciences Inc less attractive for value investors when compared to the industry median at 2.33.

You can read more about Pacira Biosciences 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.

Procaps Group SA’s Value Grade

Value Grade:

Procaps Group SA is a Luxembourg-based healthcare and pharmaceutical company. The Company develops, manufactures and sells prescription drugs and products that are differentiated by their combinations and pharmaceutical forms, as well as nutritional supplements which include omega 3 fish oils and high-potency clinical compounds. It operates its business through 5 units which are Diabetrics, Farma Procaps, Softi Gel, Vital Care, and Clinical Specialties. Diabetrics provides diabetes solutions. Farma procaps formulates, manufactures and markets branded prescription drugs in Latin America. Softi Gel provides contract drug development and manufacturing services to third party pharmaceutical companies. Vital Care develops, manufactures and markets consumer healthcare products. Clinical Specialties develops, manufactures and markets complex drugs.

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.

Procaps Group SA has a Value Score of 61, which is considered to be undervalued.

Procaps Group SA’s price-earnings ratio is 4.8 compared to the industry median at 24.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Procaps Group SA more attractive for value investors.

Procaps Group SA’s price-to-book ratio is lower than its peers. This could make Procaps Group SA more attractive for value investors when compared to the industry median at 2.33.

You can read more about Procaps Group SA’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 72, 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 2.33.

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.

• Amylyx Pharmaceuticals Inc stock has a Value Grade of A.
• Bon Natural Life Ltd stock has a Value Grade of A.
• LifeVantage Corp stock has a Value Grade of B.
• Pacira Biosciences Inc stock has a Value Grade of B.
• Procaps Group SA 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 Tuesday, July 09
• 4 Undervalued Pharmaceuticals Stocks for Monday, July 08
• Why Grifols SA - ADR’s (GRFS) Stock Is Up 19.46%
• Why HUTCHMED (China) Ltd (ADR)’s (HCM) Stock Is Down 9.53%

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