3 stocks that are absurdly cheap right now
One of the best ways to maximize your chances of getting a good return on a stock is to buy it when it’s very cheap. But with the average stock on the S&P 500 Now trading at over 27 times its earnings and the index has climbed 15% over the past 12 months, it is not easy for investors to find good deals.
The good news is that there is still some amazing deals. Three ridiculously cheap stocks that you should consider buying right now are AbbVie (NYSE: ABBV), Light technologies (NYSE: LUMN), and Dell (NYSE: DELL). They are trading at relatively low multiples of earnings and 2021 could be a good year for their businesses.
AbbVie is a top health care stock which became much bigger in 2019 after closing its $ 63 billion deal to acquire Botox maker Allergan. While the immunosuppressant Humira remains the company’s best-selling drug, AbbVie will lose its patent protection in 2023. So it makes sense that the company looks for ways to diversify as it tries to prepare for the inevitable downturn. revenues. But with a large portfolio that includes drugs in various categories including immunology, aesthetics, eye care, and women’s health, AbbVie has plenty of growth opportunities down the road.
In the nine-month period ending September 30, AbbVie’s total revenue of $ 31.9 billion increased 30% over the prior year period, primarily due to the inclusion of Allergan’s results, as the deal was not concluded until May of last year. . However, its profits of $ 4.6 billion during the period were down 9.9% year-over-year.
But those numbers will improve as Allergan and AbbVie continue to integrate and eliminate redundancies to make their operations more efficient. Today, AbbVie shares are trading at a rolling prices / benefits (P / E) of 23, which is still cheaper than the average S&P 500 stock. However, when you look at its forward P / E, which takes into account the earnings analysts expect from the company at the end of the day. future, this multiple comes down to only nine.
Despite rising 18% in the past year, AbbVie still looks like a bargain, especially as hospitals hope to resume more of their daily operations this year and doctors will likely prescribe more drugs. to the many patients who skipped doctor visits. during the pandemic. And with a dividend yield of around 5% (well above the S&P 500 averaging around 1.6%), there’s even more incentive to stock up on stocks right now.
Lumen, formerly known as CenturyLink, is another cheap stock that might be too good a buy to ignore. Shares of the company have fallen 22% in the past 12 months and may be due to a rally. His final P / E is 8, and with an even lower forward P / E of 7, the stock looks like a bargain.
The Louisiana-based company is well positioned to meet the needs of businesses trying to be more digital and remote. With its hyper-wide network, Lumen helps offices get connected, and its VPN ensures that those connections are secure and private.
In the past three quarters, the company’s revenue of $ 15.6 billion has fallen 3.5%, but without goodwill impairment charges (which totaled $ 6.5 billion a year ago). an) weighing on its operations, it made a profit of $ 1.1 billion against a loss of $ 5.5 billion. in the period of the previous year.
With the rollout of several vaccines likely slowing the pandemic this year, 2021 is set to be a better year for the economy. And that will lead to greater demand for Lumen’s services, making a rally in the share price a real possibility this year. Its cheap price will only make it more attractive to value investors. It also pays an attractive quarterly dividend of $ 0.25, which at a price of $ 10 earns 10% per annum, which could make it a very worthwhile buy for income investors.
Like Lumen, Dell is a company that will thrive as businesses invest more in the cloud and technology in general. And while this is the best performing stock on this list, with a 44% increase in value over the past year, it might not be too late to buy stocks just yet. from Dell. Its final P / E ratio is 23, which isn’t that cheap – at least not until you look at its forward P / E, which is considerably lower than a multiple of just 10.
What makes Dell an attractive investment is that the tech company’s business has been fairly stable, even in the midst of the pandemic. Sales for the nine-month period ending Oct. 30 totaled $ 68.1 billion, which is stable from the prior year period. And with fewer selling, general and administrative expenses, its $ 3 billion operating profit was a 55.7% year-over-year improvement.
Dell’s diverse combination of physical IT products and cloud-based solutions make it a safe and diverse buy. In what is expected to be a stronger economy this year, Dell could perform even better as businesses upgrade their existing hardware and make the most of the cloud to support teleworkers – a trend that could be here to stay. It’s the only stock on this list that doesn’t pay a dividend, but that doesn’t make buying worse, as Dell could have a fantastic year in 2021.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.