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Since its low in Mid-April, the S&P 500 has increased 25% while the Nasdaq Composite has surged almost 35% — with both hitting all-time highs.

But with that surge, the valuations of those indexes have both increased as well. The P/E ratio of the S&P 500 is back up to almost 30, which is higher than the 10-year average of 24 and the highest since it spiked in 2021.

The P/E ratio of the Nasdaq Composite has soared to 32, which is also above the 10-year average of roughly 26. What these numbers mean is that investors are paying higher multiples than normal for each share of earnings – so when earnings disappoint or don’t keep that same rapid pace that is expected, shares prices could drop.

On the other hand, stocks that are trading at lower multiples are known as value stocks. The best value stocks are those that are trading below their intrinsic value with plenty of upside to grow. One of the best value stocks to consider right now with excellent upside is Adtalem Global Education (NYSE: ATGE).

Filling the nursing shortage

For those not familiar with the company, Adtalem is a leader in post-secondary education, focusing primarily on medical education and training. Its schools include Walden University, American University of the Caribbean School of Medicine, Chamberlain University, Ross University School of Medicine, and Ross University School of Veterinary Medicine. 

As a leader in medical education, Adtalem is poised to grow to meet the high and increasing demand for talent and professionals in the healthcare industry.

Just this week, on Wednesday, Chamberlain University, a school for nurses, signed an agreement with SSM Health, a Catholic health system, to provide education for nurses, with a direct pipeline to jobs in the SSM health system. It is expected to graduate 400 new nurses annually and help fill the nursing shortage.

This initiative should help Adtalem build on the momentum it gathered in the March quarter, when it saw a 10% increase in enrollments into its schools. Revenue grew 13% to $461 million while net income soared 65% year-over-year to $60.8 million, or $1.59 per share. Adtalem beat revenue and earnings estimates.

Adtalem also raised its guidance for the full fiscal year last quarter. The company now expects revenue in the range of $1.760 billion to $1.775 billion, which would represent 11% to 12% growth year-over-year. Adjusted earnings are anticipated to be $6.40 to $6.60 per share, up 28% to 32% year-over-year.

This is the third time Adtalem has raised its guidance this fiscal year, once each quarter. At the beginning of the fiscal year, Adtalem guided for revenue of $1.660 billion to $1.700 billion, and adjusted earnings of $5.60 to $5.85 per share.

Growth at a low price, flying under the radar

Adtalem stock has been on fire this year, up 31% year-to-date and almost 79% over the past one-year period. Long term, it has been equally fantastic, with a five-year average annualized return of 30.4% and a 10-year average annualized return of 14.8%. Both of those rates far outpace the S&P 500.

The great thing about this stock is that it really has flown below the radar. Even with this steady, strong growth, it is still a relative value. The stock is trading at a reasonable 20 times earnings, which is below the S&P 500 average, and 16 times forward earnings.

Analysts are overwhelming bullish on the stock, setting a median price target of $143 per share. That would be 19% higher than the current share price.

During a time of rising uncertainty and high valuations, Adtalem stock might be one of the best values out there.

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