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, September 10, 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.

Bausch Health Companies Inc’s Value Grade

Value Grade:

Bausch Health Companies Inc. is a global diversified pharmaceutical company. The Company develops, manufactures, and markets a range of products primarily in gastroenterology (GI), hepatology, neurology, dermatology, eye health, and others, through Bausch + Lomb Corporation. Its Salix segment consists of sales in the United States of GI products. Its International segment consists of sales, with the exception of sales of Bausch + Lomb products and Solta Medical aesthetic medical devices, outside the United States and Puerto Rico of branded pharmaceutical products, branded generic pharmaceutical products and other products. Its Solta Medical segment consists of global sales of Solta Medical aesthetic medical devices. Its Diversified segment consists of sales in the United States of pharmaceutical products in the areas of neurology and certain other therapeutic classes. Its Bausch + Lomb segment consists of global sales of Bausch + Lomb Vision Care, surgical and pharmaceutical 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.

Bausch Health Companies Inc has a Value Score of 88, which is considered to be undervalued.

When you look at Bausch Health Companies Inc’s price-to-sales ratio at 0.25 compared to the industry median at 2.99, this company has a lower price relative to revenue compared to its peers. This could make Bausch Health Companies Inc’s stock more attractive for value investors.

Now, let’s assess Bausch Health Companies Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 8.2, when compared to the industry median of 11.1, 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. Bausch Health Companies Inc’s shareholder yield is higher than its industry median ratio of (2.83%). 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.

Lastly, let’s take a look at Bausch Health Companies Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bausch Health Companies Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 21.21. This could make Bausch Health Companies Inc more attractive because the lower P/FCF ratio indicates that Bausch Health Companies 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.

China Pharma Holdings Inc’s Value Grade

Value Grade:

China Pharma Holdings Inc is a company principally engaged in the development, manufacture and marketing of pharmaceutical products. The Company's products are for human use in connection, and with a variety of high-incidence and high-mortality diseases and medical conditions prevalent. The Company manufactures pharmaceutical products in the form of dry powder injectables, liquid injectables, tablets, capsules, and cephalosporin oral solutions. In addition, the Company is also engaged in the production of comprehensive healthcare products and protective 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.

China Pharma Holdings Inc has a Value Score of 62, which is considered to be undervalued.

China Pharma Holdings Inc’s price-to-book ratio is higher than its peers. This could make China Pharma Holdings Inc less attractive for value investors when compared to the industry median at 2.88.

You can read more about China Pharma 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.

Immunoprecise Antibodies Ltd’s Value Grade

Value Grade:

ImmunoPrecise Antibodies Ltd. is a Canada-based biotherapeutic research and technology company. It leverages systems biology, multiomics modelling and artificial intelligence systems to support its technologies in bioplatform-based antibody discovery. Its services include highly specialized, full-continuum therapeutic biologics discovery, development, and out-licensing to support its business partners to discover and develop novel biologics. It utilizes custom antigen modeling, target analysis using Natural Language Processing and the HYFTTM analysis to lay the groundwork for the subsequent experimental phases. It offers services, such as immunogen design and manufacturing, B cell sorting incorporating its function-first B cell screening and sequencing, and the production and screening of custom, immune, and naive phage display libraries. It also operates LSA instrument platform, which is a provider of high-throughput large and small molecule screening and characterization solutions.

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.

Immunoprecise Antibodies Ltd has a Value Score of 62, which is considered to be undervalued.

Immunoprecise Antibodies Ltd’s price-to-book ratio is higher than its peers. This could make Immunoprecise Antibodies Ltd less attractive for value investors when compared to the industry median at 2.88.

You can read more about Immunoprecise Antibodies 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.

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 79, which is considered to be undervalued.

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.

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 69, 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 2.88.

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.

111 Inc - ADR’s Value Grade

Value Grade:

111 Inc is an investment holding company primarily engaged in the operation of integrated online and offline healthcare platform. The Company mainly operates its business through two segments. The Business to Customer (B2C) segment is engaged in the sale of pharmaceutical and other health and wellness products through 1 Medicine Marketplace, mobile apps, other online channels and offline pharmacies to consumers and certain enterprise customers. The Business to Business (B2B) segment is engaged in the sale of pharmaceutical products to pharmacies on 1 Pharmacy. The Company also provides customers with online consultation and electronic prescription services through the internet hospital 1 Clinic. The Company’s products include drugs, nutritional supplements, medical supplies and devices and other products. The Company mainly conducts its business in 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.

111 Inc - ADR has a Value Score of 81, which is considered to be undervalued.

You can read more about 111 Inc - ADR’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.

• Bausch Health Companies Inc stock has a Value Grade of A.
• China Pharma Holdings Inc stock has a Value Grade of B.
• Immunoprecise Antibodies Ltd stock has a Value Grade of B.
• TRACON Pharmaceuticals Inc stock has a Value Grade of B.
• cbdMD Inc stock has a Value Grade of B.
• 111 Inc - ADR stock has a Value Grade of A.

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, September 10
• 5 Undervalued Pharmaceuticals Stocks for Monday, September 09
• Why ADMA Biologics Inc’s (ADMA) Stock Is Up 13.04%
• Why Pacira Biosciences Inc’s (PCRX) Stock Is Down 4.48%

AAII Disclaimer

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