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Should Value Investors Buy These Medical Stocks?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Phibro Animal Health (PAHC - Free Report) . PAHC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.65, which compares to its industry's average of 24.22. Over the past 52 weeks, PAHC's Forward P/E has been as high as 23.75 and as low as 13.97, with a median of 17.87.

Investors will also notice that PAHC has a PEG ratio of 1.68. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PAHC's PEG compares to its industry's average PEG of 1.93. Over the last 12 months, PAHC's PEG has been as high as 2.24 and as low as 1.68, with a median of 1.92.

Finally, we should also recognize that PAHC has a P/CF ratio of 9.81. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PAHC's current P/CF looks attractive when compared to its industry's average P/CF of 13.43. Over the past year, PAHC's P/CF has been as high as 16.03 and as low as 8.70, with a median of 11.17.

If you're looking for another solid Medical - Products value stock, take a look at Quidel (QDEL - Free Report) . QDEL is a # 1 (Strong Buy) stock with a Value score of A.

Shares of Quidel currently holds a Forward P/E ratio of 7.26, and its PEG ratio is 1.03. In comparison, its industry sports average P/E and PEG ratios of 24.22 and 1.93.

QDEL's price-to-earnings ratio has been as high as 31.50 and as low as 4.02, with a median of 16.37, while its PEG ratio has been as high as 1.03 and as low as 0.16, with a median of 0.29, all within the past year.

Quidel sports a P/B ratio of 2.19 as well; this compares to its industry's price-to-book ratio of 2.83. In the past 52 weeks, QDEL's P/B has been as high as 5.09, as low as 1.91, with a median of 3.49.

These are just a handful of the figures considered in Phibro Animal Health and Quidel's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PAHC and QDEL is an impressive value stock right now.


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