According to most statistics, the stock market is highly priced these days. But that doesn’t mean there aren’t any bargains to be found.
Three Motley Fool contributors think they’ve found dirt-cheap healthcare stocks to buy now. Here’s why they picked CRISPR therapies (NASDAQ: CRSP), Gilead Sciences (NASDAQ: GILD)And Pfizer (NYSE: PFE).
You can still enter on the ground floor
Prosper Junior Bakiny (CRISPR Therapeutics): Valuing relatively small biotech companies that generate little to no revenue is not an exact science. Yet gene editing specialist CRISPR Therapeutics appears cheap at its current level. CRISPR Therapeutics’ market cap is $4.2 billion, despite the recent approval of Casgevy, a treatment for two blood-related diseases that the company developed in partnership with Vertex Pharmaceuticals.
CRISPR Therapeutics and Vertex Pharmaceuticals are eyeing a huge opportunity with Casgevy. The drug retails for $2.2 million in the U.S. They estimate a market of 35,000 patients in the U.S. and Europe, with another 23,000 in some Middle Eastern countries where Casgevy is also approved. CRISPR Therapeutics should eventually generate well over $1 billion in sales from Casgevy.
The company has also shown that its gene-editing platform can deliver tangible results in unlocking treatments where few are available. There is a world of opportunity: many conditions have no approved treatments. Many others are in dire need of better standards of care. One of CRISPR Therapeutics’ promising projects is its work on type 1 diabetes, for which the company is trying to develop a functional cure.
In my opinion, CRISPR Therapeutics is a biotech giant in the making. Casgevy will raise the funds that will help it advance its gene editing platform. Expect more major clinical and regulatory advancements from the company over the next five years. While CRISPR Therapeutics has delivered strong returns since its initial public offering (IPO) in 2016, there remains significant upside for the biotech, at least for investors willing to be patient.
Gilead Sciences Could Be an Undervalued Growth Stock
David Jagielski (Gilead Sciences): Which top pharma stock do you want to watch right now? Gilead Sciences. While its single-digit (and sometimes negative) growth figures over the past few years may not seem impressive, the company has some promising catalysts that could lead to stronger numbers in the future. Plus, it pays a great dividend, yielding 3.7% — nearly three times better than the S&P 500 average 1.3%.
Gilead Sciences recently announced that lenacapavir, its twice-yearly HIV treatment, is highly effective at preventing HIV, dramatically reducing infections by 96% in a Phase 3 trial. Analysts estimate that the drug, which is already approved to treat people with multi-drug resistant HIV, could generate $4 billion in sales at its peak. That could be a significant revenue-generating product for the company, as Gilead’s revenues topped $27 billion last year.
Lenacapavir could do wonders for the company’s HIV business, which has been Gilead’s slowest growth of late. Through the first six months of 2024, HIV sales grew just 3% year-over-year to $9.1 billion. While that’s still the company’s largest segment, growth rates in liver disease (13%) and oncology (17%) were both much higher during that period and also represent exciting growth opportunities for the company going forward.
While Gilead shares are up a bit this year, the biotech stock trades at a low 12 times forward earnings (based on analyst expectations). For long-term investors, this could be an excellent buy and hold stock.
More than meets the eye
Keith Speights (Pfizer): Pfizer has been a big loser in recent years, although the company has a meager profit in 2024. However, I think there is more to this big pharma.
You can blame a lot of Pfizer’s problems on declining sales of its COVID-19 products. I don’t expect the company to ever see the booming numbers of 2021 and 2022 again. But I also think 2024 could be a low point for sales of Pfizer’s COVID-19 vaccine.
The other major challenge for the company is the impending expiration of patents on several of its flagship products. Unfortunately for Pfizer, the list includes blockbuster drugs Eliquis, Ibrance, Vyndaqel, Xeljanz and Xtandi.
Pfizer, however, isn’t surprised by this patent cliff. The company has been investing in new product development, with its respiratory syncytial virus (RSV) vaccine Abrysvo standing out. The company has also used the huge cash generated by its COVID-19 vaccine during the worst of the pandemic to fund key acquisitions, including the purchase of Seagen in 2023. As a result, Pfizer should be able to deliver solid growth in the coming years despite losing patent exclusivity on multiple products.
Meanwhile, pharmaceutical stocks are lower. Pfizer shares are trading at just 10.6 times forward earnings. That’s far lower than the S&P 500 healthcare sector’s forward earnings multiple of 19.6.
If you’re looking for another reason to buy this dirt-cheap stock, consider the dividend. Pfizer offers a forward dividend yield of 5.65%. Even better, the company’s management remains committed to growing the dividend payout over time.
Should You Invest $1,000 in CRISPR Therapeutics Now?
Before buying shares in CRISPR Therapeutics, here are some things to consider:
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Pfizer and Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics, Gilead Sciences, Pfizer and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
3 Dirt Cheap Stocks to Buy Now was originally published by The Motley Fool
