Jazz Pharmaceuticals plc – Ordinary Shares (JAZZ), Questcor Pharmaceuticals Inc (QCOR), And Three Value Investing Plays in Health Care

All of this bad news has taken its toll on Select Medical shares, but it has also made the stock look undervalued. The current trailing P/E and forward P/E multiples stand just above 8. For old school value investing proponents, Select’s price-to-book is only 1.5. Those are numbers that Warren Buffett’s mentor, Ben Graham, would like.

I doubt that 2013 will be a great year for Select Medical Holdings Corporation (NYSE:SEM). However, over the longer term, this stock could be a winner. Demand for specialty hospitals and rehab centers should increase as Americans age. Select’s current valuation could also make it an appealing acquisition target. And while investors wait for better days, the 4.9% dividend yield looks pretty nice.

The trick
Unfortunately, simply buying stocks with low P/E multiples doesn’t guarantee success. The trick to value investing lies in only buying companies that the market prices lower than they’re really worth. All three of the companies mentioned have potential “gotchas” that could warrant their current low valuations. I think, though, that these stocks could be some of the best value investing plays in health care right now. Are these “intelligent investor” ideas or “crazy investor” ideas? Chime in with your thoughts in the comments below.

The article 3 Value Investing Plays in Health Care originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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