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, October 31, 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.

Cumberland Pharmaceuticals Inc.’s Value Grade

Value Grade:

Cumberland Pharmaceuticals Inc., a specialty pharmaceutical company, focuses on the acquisition, development, and commercialization of prescription products for hospital acute care, gastroenterology, and oncology in the United States and internationally. The company offers Acetadote, an injection for the treatment of acetaminophen poisoning; Caldolor, an injection for the treatment of pain and fever; Kristalose, a prescription laxative oral solution for the treatment of constipation; Omeclamox-Pak for the treatment of Helicobacter pylori infection and duodenal ulcer disease; Vaprisol, an injection for treating euvolemic and hypervolemic hyponatremia; Sancuso, an injection for the treatment of chemotherapy treatment; and Vibativ, an injection for the treatment of certain serious bacterial infections, including hospital-acquired and ventilator-associated bacterial pneumonia, as well as complicated skin and skin structure infections. It develops RediTrex injection for the treatment of active rheumatoid, juvenile idiopathic, and severe psoriatic arthritis, as well as disabling psoriasis. In addition, the company is developing ifetroban, a product candidate that is in phase II clinical trial for the treatment of aspirin-exacerbated respiratory disease, systemic sclerosis, and duchenne muscular dystrophy; and has completed phase II clinical trial for the treatment of hepatorenal syndrome and portal hypertension. Further, it develops a clinical program for the use of ifetroban to treat progressive fibrosing interstitial lung diseases. The company was incorporated in 1999 and is headquartered in Nashville, Tennessee.

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.

Cumberland Pharmaceuticals Inc. has a Value Score of 94, which is considered to be undervalued.

When you look at Cumberland Pharmaceuticals Inc.’s price-to-sales ratio at 0.45 compared to the industry median at 2.44, this company has a lower price relative to revenue compared to its peers. This could make Cumberland Pharmaceuticals Inc.’s stock more attractive for value investors.

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. Cumberland Pharmaceuticals Inc.’s shareholder yield is higher than its industry median ratio of (10.50%). 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. Cumberland Pharmaceuticals Inc.’s price-to-book ratio is lower than its industry median ratio of 1.90. This could make Cumberland Pharmaceuticals Inc. more attractive to investors looking for a new addition to their portfolio.

Organon & Co.’s Value Grade

Value Grade:

Organon & Co. develops and delivers health solutions through a portfolio of prescription therapies and medical devices within women’s health in the United States and internationally. Its women’s health portfolio comprises contraception and fertility brands, such as Nexplanon, a long-acting reversible contraceptive; NuvaRing, a monthly vaginal contraceptive ring; Cerazette, a daily pill used to prevent pregnancy; Marvelon, progestin and estrogen used as daily pills to prevent pregnancy; Follistim AQ, used to promote the development of multiple ovarian follicles in assisted reproduction technology procedures; Elonva, an ovarian follicle stimulant; Ganirelix Acetate Injection, an injectable antagonist; and Jada, for abnormal postpartum uterine bleeding or hemorrhage. The company’s biosimilars portfolio consists of immunology products, such as Brenzys, Renflexis, and Hadlima; and two oncology products, including Ontruzant and Aybintio. It offers cholesterol-modifying medicines under the Zetia, Ezetrol, Vytorin, Atozet, Inegy, Rosuzet, and Zocor brands; Cozaar and Hyzaar for the treatment of hypertension; respiratory products for treatments of control and prevent symptoms caused by asthma under the Singulair, Dulera, Zenhale, and Asmanex brand names; and Singulair, Nasonex, Clarinex, and Aerius for treating seasonal allergic rhinitis. The company provides dermatology products under the Diprosone and Elocon brand; bone health portfolio, including Fosamax brand name; non-opioid pain management products under the Arcoxia, Diprospan, and Celestone brand names; Proscar for the treatment of symptomatic benign prostatic hyperplasia; and Propecia for the treatment of male pattern hair loss. It sells its products to drug wholesalers and retailers, hospitals, pharmacies, clinics, government agencies, health maintenance organizations, pharmacy benefit managers, and other institutions. The company was incorporated in 2020 and is headquartered in Jersey City, New Jersey.

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.

Organon & Co. has a Value Score of 96, which is considered to be undervalued.

Organon & Co.’s price-earnings ratio is 4.6 compared to the industry median at 19.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Organon & Co. more attractive for value investors.

You can read more about Organon & Co.’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.

Perrigo Company plc’s Value Grade

Value Grade:

Perrigo Company plc provides over-the-counter health and wellness solutions to enhance individual well-being in the United States, Europe, and internationally. It operates through Consumer Self-Care Americas and Consumer Self-Care International segments. The company develops, manufactures, markets, and distributes self-care consumer products, such as upper respiratory products, including cough suppressants, expectorants, and sinus and allergy relief; nutrition products consisting of infant formulas and nutritional beverages; digestive health products, including antacids, anti-diarrheal, and anti-heartburn; pain and sleep-aids products comprising pain relievers and fever reducers; and oral care products, which include toothbrushes, toothbrush replacement heads, floss, flossers, whitening products, and toothbrush covers. It also offers healthy lifestyle products, such as smoking cessation, well-being, and weight management products; skin care products consisting of dermatological care, scar management, lice treatment, and other products for various skin conditions; women’s health products comprising feminine hygiene and contraceptives; vitamins, minerals, and supplements; rare diseases business; and other miscellaneous self-care products. The company sells its products under the Compeed, Dr. Fresh, Firefly, Good Sense, Good Start, Mederma, Nasonex, Plackers, Prevacid24HR, REACH, Rembrandt, Steripod, Opill, Solpadeine, Coldrex, Physiomer, NiQuitin, ACO, ellaOne, Compeed Stops, XLS, Arterin, Davitamon, Apiserum, Abtei, and Nicorette brands. It also offers contract manufacturing services. The company sells its products through retail drug, supermarket, and mass merchandise chains; e-commerce stores; wholesalers; pharmacies; drug and grocery retailers; and para-pharmacies. The company was formerly known as Perrigo Company and changed its name to Perrigo Company plc in December 2013. Perrigo Company plc was founded in 1887 and is headquartered in Dublin, Ireland.

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.

Perrigo Company plc has a Value Score of 61, which is considered to be undervalued.

Perrigo Company plc’s price-to-book ratio is higher than its peers. This could make Perrigo Company plc less attractive for value investors when compared to the industry median at 1.90.

You can read more about Perrigo Company plc’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.

SciSparc Ltd.’s Value Grade

Value Grade:

SciSparc Ltd., a clinical-stage pharmaceutical company, develops drugs based on cannabinoid therapies. Its drug development programs include SCI-110 for the treatment of Tourette syndrome and Alzheimer’s disease and agitation; SCI-160 for the treatment of pain; SCI-210 for the treatment of autism spectrum disorder and status epilepticus; and CannAmide, an anti-inflammatory and chronic pain solution. The company has an agreement with Procaps to develop and commercially manufacture SCI-110 and CannAmide, a palmitoylethanolamide oral tablet in softgel capsule form. It also has an agreement with The Israeli Medical Center for Alzheimer’s to conduct a phase IIa clinical trial to evaluate the safety, tolerability, and efficacy of SCI-110 in patients with Alzheimer’s disease and agitation; and a collaboration with Clearmind Medicine Inc. The company was formerly known as Therapix Biosciences Ltd. and changed its name to SciSparc Ltd. in January 2021. SciSparc Ltd. was incorporated in 2004 and is headquartered in Tel Aviv-Yafo, Israel.

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.

SciSparc Ltd. has a Value Score of 79, which is considered to be undervalued.

SciSparc Ltd.’s price-to-book ratio is higher than its peers. This could make SciSparc Ltd. less attractive for value investors when compared to the industry median at 1.90.

You can read more about SciSparc 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.

Takeda Pharmaceutical Company Limited’s Value Grade

Value Grade:

Takeda Pharmaceutical Company Limited engages in the research, development, manufacture, marketing, and out-licensing of pharmaceutical products in Japan and internationally. It offers pharmaceutical products in the areas of gastroenterology, rare diseases, plasma derived therapies, immunology, oncology, and neuroscience. The company provides its products under the Entyvio, Gattex/Revestive, Takecab/Vocinti, EOHILIA, Alofisel, Dexilant, Pantoloc/Controloc, Adynovate/Adynovi, Feiba, Recombinate, Hemofil/Immunate/Immunine, Takhzyro, Livtencity, ADZYNMA, Elaprase, Replagal, Advate, Flexbumin, Vpriv, Gammagard Liquid/Kiovig, Hyqvia, Cuvitru, Exkivity, FRUZAQLA, Ninlaro, Velcade, Azilva-F, Lotriga, Iclusig, Leuplin/Enantone, Adcetris, vyvanse/elvanse, Trintellix, QDENGA, and Alunbrig brands. It has in-license agreement with BioMarin, Luxna Biotech, GlaxoSmithKline, Halozyme, and Kamada; collaboration with Neurocrine Biosciences, Inc., Seagen Inc., Anima Biotech, Denali Therapeutics, KSQ Therapeutics, Noile-Immune Biotech, Center for iPS Cell Research Application, Kyoto University (CiRA), and Charles River Laboratories; licensing agreement with Mirum Pharmaceuticals and Twist Bioscience, UCSD/Fortis Advisors, PeptiDream, MD Anderson Cancer Center, Teva Pharmaceutical Industries, and Xenetic Biosciences; collaboration and licensing agreement with Arrowhead Pharmaceuticals Inc., Engitix, Genevant Sciences Corporation, Sosei Heptares, Zedira/Dr. Falk Pharma, Exelixis, Inc., GlaxoSmithKline, Heidelberg Pharma, HUTCHMED, Presage Biosciences, Codexis, Inc., Ensoma, Envozyne, KM Biologics, and Selecta BioScience, and Ovid Therapeutics Inc.; and collaboration with ZEDIRA GmbH and Dr. Falk Pharma GmbH. It has research collaboration and licensing agreement with Crescendo Biologics, Code Bio, Immusoft, Poseida Therapeutics, and Selecta Biosciences. The company was founded in 1781 and is headquartered in Tokyo, Japan.

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.

Takeda Pharmaceutical Company Limited has a Value Score of 66, which is considered to be undervalued.

Takeda Pharmaceutical Company Limited’s price-earnings ratio is 23.7 compared to the industry median at 19.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Takeda Pharmaceutical Company Limited less attractive for value investors.

You can read more about Takeda Pharmaceutical Company Limited’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.

Viatris Inc.’s Value Grade

Value Grade:

Viatris Inc. operates as a healthcare company worldwide. The company operates in four segments: Developed Markets, Greater China, JANZ, and Emerging Markets. It offers prescription brand drugs, generic drugs, complex generic drugs, biosimilars, and active pharmaceutical ingredients (APIs). The company offers drugs in various therapeutic areas, including noncommunicable and infectious diseases; biosimilars in the areas of oncology, immunology, endocrinology, ophthalmology, and dermatology; and APIs for antibacterial, central nervous system agents, antihistamines/antiasthmatics, cardiovascular, antivirals, antidiabetics, antifungals, and proton pump inhibitor areas, as well as support services, such as diagnostic clinics, educational seminars, and digital tools to help patients better manage their health. It provides it medicines in the form of oral solid doses, injectables, complex dosage forms, and APIs to retail and pharmacy establishments, wholesalers and distributors, payers, insurers and governments, and institutions. The company distributes its products through pharmaceutical wholesalers/distributors, pharmaceutical retailers, institutional pharmacies, mail-order and e-commerce pharmacies, and specialty pharmacies. It sells its products under the Lyrica, Lipitor, Creon, Influvac, Wixela Inhub, EpiPen auto-injector, Fraxiparine, and Yupelri; Norvasc and Viagra; AMITIZA, Lipacreon, and Effexor; and Celebrex and ARV names, as well as glargine and SEMGLEE names. The company has collaboration and licensing agreements with Revance Therapeutics, Inc.; and Momenta Pharmaceuticals, Inc. Viatris Inc. was founded in 1961 and is headquartered in Canonsburg, Pennsylvania.

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.

Viatris Inc. has a Value Score of 93, which is considered to be undervalued.

Viatris Inc.’s price-to-book ratio is higher than its peers. This could make Viatris Inc. less attractive for value investors when compared to the industry median at 1.90.

You can read more about Viatris 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 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.

• Cumberland Pharmaceuticals Inc. stock has a Value Grade of A.
• Organon & Co. stock has a Value Grade of A.
• Perrigo Company plc stock has a Value Grade of B.
• SciSparc Ltd. stock has a Value Grade of B.
• Takeda Pharmaceutical Company Limited stock has a Value Grade of B.
• Viatris Inc. 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.

• Meeting Your Asset Allocation Needs With Schwab Funds and ETFs
• 6 Undervalued Pharmaceuticals Stocks for Thursday, October 31
• 7 Undervalued Pharmaceuticals Stocks for Wednesday, October 30
• 6 Undervalued Pharmaceuticals Stocks for Tuesday, October 29

AAII Disclaimer

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