The bull market has had a mixed impact on stocks across a wide range of sectors in recent years. While some companies have survived the waves of the bull market, others have retreated for one reason or another or been beaten down by the market as a whole.
Even if you have a more modest amount to invest, say $200, there are still quality companies just begging to be bought in today’s environment. Sometimes these stocks are discounted as fickle investor sentiment prevails, but they can still be superior buys in the long term. Here are two such names you can consider for your portfolio.
1. Pfizer
Pfizer (NYSE:PFE) has certainly struggled in recent years after its exceptional performance during the height of the COVID-19 pandemic due to its vaccine and oral antiviral drug. While the tailwind from these products has long since faded, there’s plenty to like about this company if you’re a long-term buy-and-hold investor. Pfizer remains one of the largest healthcare companies in the world, with a portfolio of blockbuster and emerging vaccines and medicines in disease areas including oncology, hematology and immunology.
The company went on an acquisition spree with the billions in revenue and profits brought in from COVID-19 products. One notable acquisition was that of Seagen, a cancer drugmaker, for a whopping $43 billion, a purchase that has been integral to management’s goal of having eight or more successful oncology drugs in its portfolio by 2030. Pfizer plans to achieve this goal through a combination of new drugs and medications. additional indications for existing ones. Management also plans to double the number of patients treated with cancer drugs by then, from the current number of approximately 2.3 million lives.
The company’s oncology division will primarily focus on various forms of breast cancer, genitourinary cancer, blood cancer and thoracic cancer, areas where it already has drugs approved, but with varying penetration rates. Management has previously said the Seagen acquisition alone could add $10 billion in additional annual revenue to Pfizer’s top line by 2030. However, oncology drugs are only part of Pfizer’s growth strategy.
The company has been aggressively cutting costs and hopes to achieve $4 billion in net cost savings by 2024 alone. The company’s recent acquisitions have also yielded new drugs, such as Nurtec, a migraine therapy developed by Biohaven Pharmaceuticals, which is now part of Pfizer. Nurtec was first approved by the U.S. Food and Drug Administration in 2020, becoming the first in a class of drugs known as calcitonin gene-related peptide (CGRP) receptor antagonists, available in a fast-acting orally disintegrating tablet (ODT).
It is estimated that Nurtec has an annual peak potential of approximately $6 billion. It’s racing toward that runway, delivering $213 million in revenue in 2022 and $928 million (just under the required to achieve blockbuster status) in 2023. Pfizer’s current blockbusters include blood thinner Eliquis, as well as the Vyndaqel family of drugs (which formerly the treatment of cardiomyopathy from wild-type or hereditary transthyretin-mediated amyloidosis) and the Prevnar family of pneumococcal vaccines, which can be used to prevent pneumonia, meningitis and sepsis.
In the most recent quarter, revenue grew 3% operationally, even when accounting for declining sales of COVID-19 products. If you exclude these products, Pfizer’s revenue grew 14% operationally, which is a pretty big growth rate when you consider one at this level of maturity and scale. Total revenue was $13.3 billion, while profits for the three-month period totaled $42 million.
Pfizer is also a loyal dividend payer. As investor interest in stocks has waned significantly, the dividend yield has risen to a juicy 5.8%. Income investors who want to invest in an established healthcare company and also enjoy some dividend yields can still find plenty of green flags for this company.
2. elf Beauty
Elven beauty (NYSE: ELF) has had a bumpy ride in recent months, with shares currently down around 25% since the start of the year. The cosmetics retailer is likely to face mixed investor sentiment due to a range of factors, including shifts in consumer spending patterns, uncertainty about the current macro environment filtering through to a host of growth-oriented stocks, and how inflation could impact growth rates.
That said, Elf continues to do extremely well from a financial perspective. It regularly reports double-digit growth rates, and even some of its more moderate growth forecasts for the current fiscal year still target a 25% to 27% increase in revenue from the previous year.
Elf Beauty has attracted renewed interest from a new generation of consumers in recent years with its popular TikTok campaigns and celebrity-driven advertising campaigns. The company currently has a share of approximately 12% of the US color cosmetics market, while its total international penetration compared to comparable beauty brands is only 16%.
These figures are impressive for a brand like Elf, which has long been able to withstand competition from more established beauty retailers with its high-quality, vegan and affordable products. Elf Beauty has grown exponentially over the years from lucrative partnerships with retailers such as Goal, WalmartAnd Ultimate beauty; growing his own personal brands; and acquisitions of third-party brands.
Currently, the company is one of the top cosmetics brands sold at Target, accounting for more than 21% of the retailer’s cosmetics sales in the first quarter of eleven of fiscal year 2025. In addition to eleven cosmetics, the company also has brands such as eleven SKIN, Keys Soulcare, Naturium and Well People. Management estimates that the company has currently only penetrated about 2% of the skin care market, despite consumption in the skin care category having increased by 45%.
In Elf’s first fiscal quarter ended June 30, the company posted net sales of $324.5 million, up 50% year over year. Net income for the quarter came in at just under $48 million, while the company had $109 million in cash on hand at the end of the period. Investors may be underestimating the stock’s growth potential over the next three to five years, but that could be an opportunity for some to buy shares on the dip.
Don’t miss this second chance at a potentially lucrative opportunity
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: If you had invested $1,000 when we doubled in 2010, you would have $21,266!*
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Apple: If you had invested $1,000 when we doubled in 2008, you would have $43,047!*
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Netflix: If you had invested $1,000 when we doubled in 2004, you would have $389,794!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 7, 2024
Rachel Warren has no positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends Pfizer, Target, Ulta Beauty, Walmart and Eleven Beauty. The Motley Fool has a disclosure policy.
2 Unstoppable Growth Stocks to Buy Now for Under $200 was originally published by The Motley Fool
