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3 Bargain Stocks to Buy in a Market That’s Priced for Perfection
How richly valued are stocks right now? Legendary investor Warren Buffett has built Berkshire Hathaway‘s cash stockpile up to roughly $277 billion. When Buffett is sitting on that much cash because he can’t find appealing investments to buy, you know stocks are expensive.
There are exceptions, though. In a market that’s broadly speaking priced for perfection, three Motley Fool contributors have identified what they think are bargain stocks to buy: Axsome Therapeutics (NASDAQ: AXSM), CRISPR Therapeutics (NASDAQ: CRSP), and Pfizer (NYSE: PFE).
A biotech with multiple catalysts on the horizon
Prosper Junior Bakiny (Axsome Therapeutics): Few things can jolt biotechs, especially relatively small ones, like solid clinical and regulatory wins. Axsome Therapeutics, a drugmaker with a market cap of about $4.3 billion, could experience quite a few of those in the next two years. It has already made tremendous progress since the start of the decade, going from a clinical-stage biotech to one with two approved products on the market. But it isn’t done yet.
Within the next 12 months, AXS-07, a potential therapy for migraines, and AXS-14, an investigational treatment for fibromyalgia, could both earn regulatory approval. The company will also release results from multiple clinical trials in the coming months. Positive results could lift Axsome Therapeutics’ share price.
Is the biotech a bargain stock? In my view, the answer is yes. While Axsome Therapeutics generates little revenue and is still unprofitable — which isn’t unusual for biotechs of this size — its late-stage pipeline is incredibly promising. Before long, it should have a lineup with four to six products that will generate growing sales for years.
Axsome Therapeutics’ valuation continues to lag the potential of its pipeline. Sure, it could experience clinical and regulatory setbacks — indeed, it has already faced some. However, there is a good chance that it will generate strong returns in the next five years, partly because its likely successes aren’t baked into its valuation. That’s why I’d advise investors to buy the stock today.
A biotech with tons of upside
David Jagielski (CRISPR Therapeutics): Although it may seem like just about every growth stock is trading at a significant premium these days, there are some bargain-basement options available. One is gene-editing company CRISPR Therapeutics. It is down 24% this year, but optimism should be higher than ever for the business as it is on the cusp of some exciting growth opportunities.
Within the past year, the Food and Drug Administration approved CRISPR’s treatment Casgevy for two indications — sickle cell disease and transfusion-dependent beta-thalassemia. It could be a life-changing treatment for patients with these conditions as it provides them with a functional cure. That’s part of the reason why its list price is as high as it is — $2.2 million. CRISPR will split the profits on Casgevy 40/60 with its development partner, Vertex Pharmaceuticals.
Prior to this, CRISPR didn’t have any approved products; now, it may have a path to profitability. But despite this, the biotech stock is trading around the levels it was at back in 2019. Casgevy has the potential to generate more than $1 billion in annual revenue at its peak and is likely to play a pivotal role in CRISPR’s growth.
For investors looking for a real bargain, you don’t need to look much further than CRISPR Therapeutics. The business is still in the early stages of rolling out Casgevy, and over time investors should expect to see stronger financial results from the company. As that happens, it could trigger a big rally.
Post-pandemic problems but a brighter future
Keith Speights (Pfizer): I won’t sugarcoat matters: Pfizer faces some problems. Sales of COVID-19 vaccine Comirnaty have plunged as worries about the pandemic have subsided. Several of the company’s top blockbuster drugs will lose patent exclusivity over the next few years. And Pfizer recently voluntarily withdrew its sickle cell disease drug, Oxbryta, from the market because of safety concerns.
Because of these problems, Pfizer’s share price has fallen by more than 50% since late 2021. However, there have been two positive effects of this steep decline for investors. First, Pfizer’s forward dividend yield has risen to 5.7%. Second, the stock’s valuation has become much more attractive. Pfizer’s shares now trade at 10.6 times forward earnings. That’s well below the forward earnings multiple of 18.6 for the S&P 500 healthcare sector.
This low metric raises a question, though: Is Pfizer stock a value trap? I think the answer is a resounding “no.” The company’s future is brighter than you might think.
Pfizer recently returned to year-over-year revenue growth for the first time since late 2022, when its COVID-19 vaccine and antiviral sales were at their peak. Acquisitions have been key to this turnaround. Migraine drug Nurtec ODT, which Pfizer picked up with its 2022 acquisition of Biohaven, contributed $356 million in sales in the second quarter of 2024. Adcetris and Padcev, cancer drugs added to Pfizer’s lineup with its 2023 buyout of Seagen, together generated $673 million in sales in Q2.
I expect new products — both those developed in-house and those gained through acquisitions — will more than offset the declines in revenue from drugs that lose their exclusivity over the next several years. Pfizer’s pipeline, which features 33 late-stage programs, could produce other big winners.
Should you invest $1,000 in Axsome Therapeutics right now?
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Berkshire Hathaway, Pfizer, and Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Axsome Therapeutics, Berkshire Hathaway, CRISPR Therapeutics, Pfizer, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
3 Bargain Stocks to Buy in a Market That’s Priced for Perfection was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
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CoinShares said the United States and Bitcoin led crypto investment product dynamics last week amid growing optimism over a potential Republican election win in the US.
Bitcoin’s private keys won’t be breached any time soon, but the industry still needs to transition to “post-quantum cryptography.”
Despite record European inflows, Bitcoin has been unable to recover above the $70,000 psychological level since July.
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