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2 defeated stocks to buy and hold for ten years

It’s easy to find stocks that are underperforming broader stocks, even in a bull market like the one we’re currently in. It’s harder to find beaten-down stocks that still seem worth buying and holding for a while. Some companies are condemned to deliver substandard financial results and stock market performance virtually in perpetuity.

Satisfying, Bristol Myers Squibb (NYSE:BMY) And Pfizer (NYSE:PFE), two drugmakers that are failing to keep pace with broader stocks, arguably don’t belong to that group. Although these companies have faced recent challenges, there remain excellent reasons to invest in them for the long term. Let’s dig deeper to see why.

1. Bristol Myers Squibb

In the first quarter, Bristol Myers’ revenue of $11.9 billion rose 5% year over year. That’s a decent, but not particularly impressive, achievement for a pharmaceutical giant. However, it’s worth pointing out that the company’s year-over-year revenue growth has been in the red for several quarters.

BMY revenue chart (quarterly annualized growth).

BMY revenue chart (quarterly annualized growth).

Bristol Myers has faced some major patent cliffs, but it appears to be turning the corner, thanks in part to its portfolio of newer drugs. However, the drug manufacturer is not out of the woods yet. Cancer drug Opdivo is one of the company’s best-selling products, but its patent protection will expire by 2028. Bristol Myers should be able to address this issue as well.

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The newer portfolio includes drugs approved since 2019 that could generate about $25 billion in revenue by 2030. Sales of most of them should increase well into the 2030s. Furthermore, Bristol Myers has a plan to counter Opdivo’s revenue decline after the company hits its patent cliff. The company is developing a subcutaneous version of the drug, which is expected to treat between 65% and 75% of Opdivo’s indications.

Bristol Myers should also get approval for even more brand new products. The pipeline contains 55 connections. So in the long run, things should go well for the drugmaker, even if it will take some patience for the company to fully recover. Another reason to buy the stock: Bristol Myers offers a pretty decent dividend program. The forward yield is 5.46% and the payouts have increased by approximately 46% over the last five years.

Even though the market has underperformed lately, dividend investors should love this stock.

2. Pfizer

Pfizer’s top line is falling off a cliff. In the first quarter, the company’s revenue of $14.9 billion fell 20% year over year.

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However, the drugmaker’s situation is a little different than Bristol Myers’. Pfizer’s Comirnaty and Paxlovid still lack patent protection, but as the pandemic subsides, neither product is generating nearly as much sales as in 2021 and 2022 or even last year. That’s why Pfizer stock has failed to keep pace over the past two years.

Here’s the good news. Pfizer’s coronavirus-related work provided a net benefit to the company. The drug manufacturer’s relatively small investment in the development of COVID-19 products has paid for itself several times over. Pfizer became the first company in the history of the biopharmaceutical industry to generate $100 billion in annual revenue, money that allowed the company to spend on acquisitions and substantially improve its pipeline.

That is already paying off. Pfizer launched several brand new products last year, including Abrysvo, a vaccine against respiratory syncytial virus, and Litfulo, a therapy for an autoimmune disease called alopecia areata. But Pfizer is far from done. The company currently has 113 programs in the pipeline.

The company is well positioned to recover from recent poor stock market performance and deliver solid returns over the long term. Pfizer is also a decent dividend stock. Payouts have increased by just under 17% over the past five years and boast a forward yield of 6.04%. Going against the market by buying this stock and holding it would be a good move.

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Should you invest $1,000 in Bristol Myers Squibb now?

Before you buy shares in Bristol Myers Squibb, consider the following:

The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Bristol Myers Squibb wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.

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Prosper Junior Bakiny has no position in any of the shares mentioned. The Motley Fool holds positions in and recommends Bristol Myers Squibb and Pfizer. The Motley Fool has a disclosure policy.

2 Beaten Stocks to Buy and Hold for 10 Years was originally published by The Motley Fool

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