Price matters. That applies to automobiles, houses, laptops, and stocks. Three Motley Fool authors chose Axsome Therapeutics (NASDAQ: AXSM), CRISPR Therapeutics (NASDAQ: CRSP), and Pfizer (NYSE: PFE) as top options for investors based on price. See why they think buying these cheap stocks could be smart.
Continued market undervaluation of Prosper Junior Bakiny (Axsome Therapeutics): Small, unprofitable biotechs with limited products are hard to appraise. That description suits Axsome Therapeutics, but there are many clues that make its $3.7 billion market cap seem too low for its future potential. In the next few years, Axsome Therapeutics' robust late-stage pipeline should change its roster.
One of Axsome Therapeutics' two licensed medications, depression therapy Auvelity, is being investigated in a phase 3 research for AD agitation. Any AD treatment has been difficult to develop. With an aging population, AD patients, including agitated ones, will rise. About 70% of the 6.7 million AD patients in the U.S. last year were agitated. By 2060, that number could reach 14 million.
Auvelity passed one late-stage AD agitation clinical trial, so things are fine. Only the top of the iceberg. By next year, Axsome Therapeutics might have five marketed drugs from its extensive pipeline. Axsome Therapeutics has significant upside potential even if these programs fail.
Equally essential, the organization is building a solid future. Investors seeking cheap biotech stocks can consider Axsome Therapeutics.
CRISPR has great long-term potential. David Jagielski (CRISPR Therapeutics): Gene-therapy investments can be profitable. Grand View Research predicts a 19.5% CAGR for the worldwide gene-therapy market through the decade. If you want exposure to that market, a cheap stock like CRISPR Therapeutics could be a good long-term investment.
Given its potential for growth, CRISPR's stock looks cheap at less than $6 billion. The company may grow significantly now that Casgevy is an approved gene-therapy drug. Casgevy is a great asset for CRISPR Therapeutics. Healthcare analysts say the $2 million therapy is cost-effective.
Although CRISPR must split earnings with its development partner, Vertex Pharmaceuticals, the approval of Casgevy for sickle cell disease and beta-thalassemia should boost its financials and growth potential. CRISPR lost money in three of the prior four quarters due to low revenue. Its valuation should rise as its finances improve.
CRISPR Therapeutics' Casgevy therapy is revolutionary. With new medicines in its pipeline, this stock has great potential that investors may regret not buying at the current price.
Cheap but season-limited. Keith Speights (Pfizer): Pick any forward-looking valuation indicator, Pfizer stock will likely be appealing. I prefer the large drugmaker's 0.27 PEG ratio. Yes, Pfizer is cheap for a reason. Company sales of COVID-19 vaccine Comirnaty and oral medication Paxlovid continue to fall. Pfizer confronts a patent cliff in the coming years as many major medications lose patent protection.
I expect this pharma stock to be cheap for a season. Why? Pfizer should grow despite its obstacles. New product releases that will end by mid-year will generate $25 billion in income by 2030. That would more than cover the $17 billion in lost revenue from patent-expired pharmaceuticals.
Pfizer anticipates $20 billion in new revenue from business-development transactions by 2030. With Biohaven and Seagen purchases complete, that's likely. The company expects revenue to climb 10% between 2025 and 2030. Pfizer now pays over 6% dividends. Investors can get outstanding total returns without significant stock increases. With its favorable price, solid growth potential, and high dividend yield, buying Pfizer is a great investment.
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