We recently compiled a list of the 10 Undervalued Stocks with the Highest Upside Potential. In this article, we are going to take a look at where Acadia Healthcare Company, Inc. (NASDAQ:ACHC) stands against the other undervalued stocks.
The stock market has been more erratic with investors reacting to heightened trade tensions and new tariffs. On March 5, it was reported by BBC News that America imposed a 25% tariff on Mexican and Canadian imports and a 10% tariff on Chinese imports. China retaliated with tariffs of between 5% and 15% on selected American imports and Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum stated that retaliatory measures would be on the agenda. These tariffs have been a cause of concern over heightened business costs, supply disruptions, and a more general slowing of the global economy.
Against this backdrop, the S&P 500 fell sharply with over 80% of its constituents in red, CNBC reported. A handful of investors used the pullback to scoop up battered stocks and most notably those with solid fundamentals that have underperformed in recent months. Richard Fisher, a one-time president at the Dallas Federal Reserve, explained in a CNBC TV appearance that tariffs are a hidden tax that impose cost and have the ability to slow growth as companies adjust to higher cost. With market sentiment being very sensitive to policy and macroeconomic conditions, investors are searching for undervalued positions that can weather short-term fluctuations and generate long-term growth.
In such a scenario, investors are turning towards companies with good valuations, good growth in earnings and revenue growth rates, and sustainable competitive advantage. Value investing, where one tries to acquire stocks at a price that is lesser than their intrinsic value, is a well-tested and trustworthy means to navigate through uncertain markets.
Our Methodology
In order to allow investors to capitalize on current market imbalances, we used stocks screeners to select ten stocks that meet rigorous tests for value. We looked for firms with a forward P/E of less than 20 and a minimum average upside potential of 30% based on analysts’ target prices in an effort to supply a portfolio of solid undervalued candidates. The stocks are ranked in ascending order of analysts’ upside potential. The information was obtained on March 6, 2025, from CNN.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A healthcare professional discussing a treatment plan with a patient in an outpatient clinic.
Acadia Healthcare Company, Inc. (NASDAQ:ACHC)
Forward P/E Ratio: 11.55x
Upside Potential: 47%
Number of Hedge Fund Holders: 46
Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is a large behavioral healthcare provider with a psychiatric hospital chain, addiction treatment facilities, and outpatient facilities in America. It has been a beneficiary of a surging demand for mental healthcare in recent years, most prominently in pandemic years.
Acadia Healthcare Company, Inc. (NASDAQ:ACHC) in Q4 2024 reported EPS of $0.35 and 4.2% revenue growth quarter over quarter. It is in the process of opening new centers for addiction and mental health treatment and expanding its capacity. Its business model is to open teen, veteran, and dual-diagnosis disorder specific treatment centers. It is expanding further with telehealth services to treat more underprivileged sections of society.
With a target price of $44, a 47% gain is achievable from $30. April 2025’s next earnings release will focus on facility expansions and enhancing operational efficiency.
Overall ACHC ranks 6th on our list of the undervalued stocks with the highest upside potential. While we acknowledge the potential of ACHC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ACHC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
