Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Distributors 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 Distributors 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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3 Undervalued Distributors Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Distributors industry for Tuesday, October 29, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Distributors 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.

AMCON Distributing Company’s Value Grade

Value Grade:

AMCON Distributing Company, together with its subsidiaries, engages in the wholesale distribution of consumer products in the Central, Rocky Mountain, and Mid-South regions of the United States. It operates through Wholesale Distribution and Retail Health Food segments. The Wholesale Distribution segment distributes consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products, and institutional foodservice products. It serves retail outlets, such as convenience stores, discount and general merchandise stores, grocery stores, drug stores, liquor stores, tobacco shops, and gas stations; and institutional customers, including restaurants and bars, schools, and sports complexes, as well as other wholesalers. This segment also markets private label lines of water, candy products, batteries, and other products. In addition, the Retail Health Food segment is involved in the retail of natural, organic, dietary supplements, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Further, it operates retail health food stores under the Chamberlin’s Natural Foods, Akin’s Natural Foods, and Earth Origins Market brands. The Company was incorporated in 1986 and is headquartered in Omaha, Nebraska.

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.

AMCON Distributing Company has a Value Score of 86, which is considered to be undervalued.

When you look at AMCON Distributing Company’s price-to-sales ratio at 0.04 compared to the industry median at 0.50, this company has a lower price relative to revenue compared to its peers. This could make AMCON Distributing Company’s stock more attractive for value investors.

AMCON Distributing Company’s price-earnings ratio is 13.50 compared to the industry median at 15.30. This means it has a lower share price relative to earnings compared to its peers. This could make AMCON Distributing Company more attractive for value investors.

Now, let’s assess AMCON Distributing Company’s EV/EBITDA ratio, also known as enterprise multiple. At 10.2, when compared to the industry median of 11.5, 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. AMCON Distributing Company’s shareholder yield is lower than its industry median ratio of (0.30%). 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. AMCON Distributing Company’s price-to-book ratio is lower than its industry median ratio of 1.37. This could make AMCON Distributing Company more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at AMCON Distributing Company’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. AMCON Distributing Company’s price-to-free-cash-flow ratio is lower than its industry median ratio of 7.90. This could make AMCON Distributing Company more attractive because the lower P/FCF ratio indicates that AMCON Distributing Company 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.

Greenlane Holdings, Inc.’s Value Grade

Value Grade:

Greenlane Holdings, Inc. engages in the development and distribution of cannabis accessories, vape devices, and lifestyle products in the United States, Canada, and Europe. It operates in two segments, Consumer Goods and Industrial Goods. The company provides consumption accessories, vaporizers, pipes, rolling papers, grinders, lifestyle products and accessories, and apparel lines, as well as bubblers, rigs and merchandise. It offers its products under the Groove, Eyce, DaVinci, Higher Standards, Pollen Gear, Marley Natural, Storz and Bickel, Grenco Science, and Keith Haring brands. The company also operates e-commerce websites, such as Vapor.com, Wholesale.Greenlane.com, PuffItUp.com, HigherStandards.com, and MarleyNaturalShop.com. It serves customers through smoke shops, head shops, convenience stores, cannabis dispensaries, and specialty retailers. The company was founded in 2005 and is headquartered in Boca Raton, Florida.

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.

Greenlane Holdings, Inc. has a Value Score of 75, which is considered to be undervalued.

Greenlane Holdings, Inc.’s price-to-book ratio is higher than its peers. This could make Greenlane Holdings, Inc. less attractive for value investors when compared to the industry median at 1.37.

You can read more about Greenlane 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.

Kaival Brands Innovations Group, Inc.’s Value Grade

Value Grade:

Kaival Brands Innovations Group, Inc. sells, markets, and distributes electronic nicotine delivery system (ENDS) products and related components in the United States. The company offers Bidi Stick, a disposable and tamper-resistant ENDS product in various flavor options for adult cigarette smokers. It sells its products to non-retail customers through convenience stores and the website www.wholesale.bidivapor.com. The company was formerly known as Quick Start Holdings, Inc. and changed its name to Kaival Brands Innovations Group, Inc. in July 2019. The company is based in Grant-Valkaria, Florida. Kaival Brands Innovations Group, Inc. is a subsidiary of Kaival Holdings, LLC.

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.

Kaival Brands Innovations Group, Inc. has a Value Score of 67, which is considered to be undervalued.

Kaival Brands Innovations Group, Inc.’s price-to-book ratio is higher than its peers. This could make Kaival Brands Innovations Group, Inc. less attractive for value investors when compared to the industry median at 1.37.

You can read more about Kaival Brands Innovations Group, 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 Distributors 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 Distributors stocks as well as other industrys.

Choosing Which of the 3 Best Distributors 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.

• AMCON Distributing Company stock has a Value Grade of A.
• Greenlane Holdings, Inc. stock has a Value Grade of B.
• Kaival Brands Innovations Group, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Distributors 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 Distributors Stocks

Want to learn more about Distributors 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.

• 3 Undervalued Distributors Stocks for Monday, October 28
• 3 Undervalued Distributors Stocks for Friday, October 18
• 3 Undervalued Distributors Stocks for Monday, October 14
• 3 Undervalued Distributors Stocks for Wednesday, October 09

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.