We recently published a list of 10 Best Small-Cap Value Stocks to Buy Now. In this article, we are going to take a look at where PACS Group Inc. (NYSE:PACS) stands against other best small-cap value stocks to buy now.
Earlier on February 24, Robert Teeter of Silvercrest Asset Management shared his perspective on small-cap stocks and highlighted their link to economic conditions and sensitivity to financing activity. He noted that the Trump trade initially boosted small caps due to expectations of economic acceleration and lower interest rates, both of which are favorable for these companies. However, policy uncertainty and weaker-than-expected economic data have delayed their rally. Teeter believes that small caps will come into their own later in the year, but for now, they are facing a choppy market with significant rotation.
In advising clients, Teeter emphasized the importance of diversification within the S&P 500. He pointed out that the equal-weight benchmark has been performing well this year, and within the tech sector, the average tech stock is outperforming the tech sector as a whole. This suggests that investors are seeking diversification to protect themselves against policy risks. Teeter also highlighted healthcare as an interesting sector and noted that it has faced challenges with profit margins following the pandemic but now seems to have stabilized. He also discussed international markets and observed that they had outperformed US markets at the start of the year. He sees opportunities in these markets due to good valuations and the stabilization of the dollar, which reduces dollar strength and benefits non-US sectors.
Given Teetar’s sentiment, small-cap value stocks might be a good option right now due to their historically strong long-term performance and current undervaluation relative to large-cap stocks. According to Teeter, small caps are expected to recover later this year.
Methodology
We first used the Finviz stock screener to compile a list of small-cap value stocks that were trading between $300 million and $2 billion. We then picked 10 stocks with a forward P/E ratio under 15, that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Note: All data was recorded on March 19.
Why are we interested in 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).
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PACS Group Inc. (NYSE:PACS)
Forward P/E Ratio as of March 19: 6.31
Market Capitalization as of March 19: $1.87 billion
Number of Hedge Fund Holders: 31
PACS Group Inc. (NYSE:PACS) operates and manages a network of skilled nursing and assisted living facilities across the US. It provides senior care services and engages in the acquisition and ownership of healthcare-related properties. It delivers different care options to meet the diverse needs of the senior population.
Recent analyst adjustments included Macquarie lowering its price target to $24 from $42 while maintaining an Outperform perform rating on the company, and Truist Financial reducing theirs to $32 from $46, with a Buy rating. However, PACS Group Inc. (NYSE:PACS) is demonstrating aggressive growth in its post-acute care facility operations. This expansion is driven by strategic acquisitions from November 2024 that included 8 facilities in Pennsylvania, which added 1,199 beds and marked the company’s entry into a new state.
Further expansion occurred in December 2024 with the acquisition of 11 facilities in Tennessee, which added 1,310 beds and extended the company’s footprint to 17 states. In FQ1 2025, PACS Group Inc. (NYSE:PACS) anticipates acquiring its 12th nursing facility of the period. Employing a flexible acquisition strategy, that utilizes both lease and purchase models, the company operates 314+ facilities, employs 40,000+ individuals, and provides care to ~30,000 patients daily.
Overall, PACS ranks 4th on our list of best small-cap value stocks to buy now. While we acknowledge the growth potential of PACS, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PACS 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.
