Somehow, the stock market crash earlier this year seems like a distant memory. After all, we just experienced one of the best quarterly returns on the stock market in decades in the second quarter. Now, you are likely to hear people talk about how steep the market valuation is.
But not all stocks are priced premium. In fact, some remain relative bargains despite the tremendous recovery in the market in recent months. Here are three stocks that are still ridiculously cheap right now (listed in alphabetical order).
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1. AbbVie
AbbVie (NYSE: ABBV) Shares have risen more than 20% in the past three months. But the big pharmaceutical stock is trading at just over 10 times the expected profit.
There is an obvious reason why AbbVie has such a cheap valuation. It already faces biosimilar competition in Europe for Humira, by far its best-selling drug, and will have to adapt to it in the US in 2023. Investors are concerned that the company may be in trouble when the sauce trains a la popular The immunosuppressant begins to dry out.
Please note, however, that Humira sales will not evaporate overnight. International sales of the drug decreased significantly after biosimilars hit the market, but still topped $ 1 billion in the first quarter of 2020. More importantly, AbbVie has other arrows in its quiver that will help offset future declines in Humira sales, notably including new immune drugs. Rinvoq and Skyrizi, and Imbruvica and Venclexta cancer drugs.
AbbVie will not have to generate impressive profit growth to provide attractive total return. This is because the company offers an exceptional dividend with a current yield close to 4.8%. Investors should also like its record of dividend hikes: The company has increased its payments in each of the past 47 years.
2. Bristol Myers Squibb
Bristol Myers Squibb (NYSE: BMY) it is quoted at a price-to-benefit ratio of 9.4. And its 0.95 price / earnings / growth ratio (PEG) makes the stock look even more attractive.
The drugmaker’s lineup is loaded with box office hits. Sales continue to rise for the blood thinner Eliquis, the arthritis medicine Orencia and the cancer medicine Sprycel. Opdivo is likely to receive cancer immunotherapy with new approved indications. Bristol Myers Squibb has also added three big winners thanks to the Celgene acquisition: Revlimid and Pomalyst blood cancer drugs and the solid tumor drug Abraxane.
But the company’s newest drugs and late-stage pipeline candidates are what really make Bristol Myers Squibb a must-see. The blood disorder drug Reblozyl and the multiple sclerosis drug Zeposia could easily become blockbusters in the not too distant future. Expecting to get regulatory approvals for ide-cel and lyso-cel CAR-T cell therapies, both could generate maximum annual sales of $ 2 billion or more.
Wall Street analysts believe that Bristol Myers Squibb will increase its earnings by an average of almost 22% annually over the next five years. Add to that mix the company’s dividend, which is currently over 3%, and this cheap pharmaceutical stock could provide impressive total returns to investors.
3. Pfizer
You may have noticed a pattern: The first two cheap stocks discussed here are pharmaceutical companies. So is the third. Pfizer (NYSE: PFE)It is also a manufacturer of medicines with an economic valuation. Its shares are currently trading at less than 12.5 times expected earnings.
However, at first glance it may seem like a less than ideal choice. Pfizer is facing a rapid decline in sales of the nerve pain medication Lyrica. Additionally, it reported disappointing results last month from an advanced-stage study of Ibrance as adjuvant therapy in treating early-stage breast cancer. Ibrance’s market prospects now appear to be much lower due to this clinical setback.
However, Pricat will not be weighed by Lyrica for much longer. The company plans to spin off its Upjohn unit (which markets Lyrica and other older drugs) and merge it with Mylan. Pfizer’s portfolio also includes several candidates who could be big winners, including the COVID-19 vaccine candidate being developed with German biotechnology. BioNTech.
Income investors have loved Pfizer for a long time. That should not change after the Upjohn-Mylan agreement concludes. Its dividend yield will not be much lower than its current 4.3% yield. If your portfolio delivers on its promise, Pfizer’s future will look much brighter than its recent past.
