Following a year where the stock market didn't even decline by more than 4%, 2018 has been markedly different. Currently, the stock market is undergoing its largest correction -- a drop of at least 10% from a recent high -- since 2011.

Why the downside? Well, you can't point to any one factor. Rather, it's been a combination of fear tied to the U.S.-China trade war, rising interest rates, a flattening yield curve, and disharmony in the White House, to name a few things.

Prescription drug capsules lying atop a messy pile of hundred-dollar bills.

Image source: Getty Images.

These drug stocks have a forward P/E of 8 or less

While investors typically loathe stock market corrections, they do have a bright side. Namely, they breed bargains for long-term investors. And there are perhaps no better buys right now than drug stocks. According to forward price-to-earnings ratio data that dates back to 1997, biotechnology stocks are nearly as inexpensive now as they've been over the past two decades, with pharmaceutical stocks valued at less than 16 times forward earnings, which is historically reasonable given their steady profits and delectable margins. 

With this in mind, if you're looking to snag some of the cheapest drug stocks to hold into 2019, and potentially for many more years to come, consider Teva Pharmaceutical Industries (TEVA -0.46%), Celgene (CELG), and Jazz Pharmaceuticals (JAZZ -1.04%).

Two lab researchers examining test tubes and making notes on a clipboard.

Image source: Getty Images.

Teva Pharmaceutical Industries

Sometimes stocks become "cheap" on the basis of forward price to earnings for a reason -- and that's very much the case with Teva Pharmaceutical. The world's largest generic-drug maker had a 2017 to forget, with the company settling with U.S. regulators over bribery charges, lowering sales and profit outlooks, replacing its CEO, contending with generic-drug price weakness, facing generic competition for its top drug (Copxaone), and completely halting what had been a healthy dividend. But things are changing for Teva in a positive way.

The biggest concern surrounding Teva is the company's debt load, which at one point topped $34 billion in net debt following its Actavis acquisition. However, belt-tightening, which has included the disposition of noncore assets, layoffs, and the end of its dividend, are on track to save the company $3 billion annually by the end of next year. That's a nearly 20% reduction in full-year expenses. In terms of net debt, Teva is now down to $27.6 billion. It does have a ways to go, but it's moving in the right direction. And with $4 billion in operating cash flow over the trailing-12-month period, it's not as if liquidity is an issue.

The outlook for generic-drug pricing is also improving. Though generic drugs will never bring in the same margins as branded therapies (Teva has a line of brand-name therapies, too), they're a less-costly option than brand-name drugs. As medical care inflation continues to outpace wage growth, it's going to coerce consumers and physicians to look to generics more and more as time goes by.

Just how cheap is Teva? Try a little over five times next year's profit-per-share forecast. Even with a modest revenue slowdown on the docket in 2019 as Teva adjusts to Copaxone facing generic competition, investors could be snagging a massive bargain with long-term appeal.

A biotech lab technician using a dropper with test tubes.

Image source: Getty Images.

Celgene

Then again, sometimes there seems to be no viable reason why a stock becomes so cheap. That, folks, is Celgene.

If I had to take a stab at the reasoning behind Celgene's forward P/E ratio of less than six, my guess would be Wall Street's concern regarding its reliance on multiple myeloma drug Revlimid, which is expected to make up close to 64% of the $15.2 billion in projected full-year sales for 2018. Should this cash cow be compromised in any way, Celgene and its shareholders would feel immediate pain. 

On the bright side, Celgene has orchestrated settlements with prospective generic entrants that'll keep the bulk of generic versions of Revlimid on the sidelines until the end of January 2026. In effect, the company's cash cow appears perfectly safe for many years to come. That's a good thing, because Celgene really likes to invest in label expansion opportunities and partnerships.

Aside from multiple organic expansion opportunities for Revlimid and anti-inflammatory pill Otezla, Celgene has an abundance of partnerships (in excess of three dozen). Many of the company's partners are working on cancer, inflammation, or immunology therapies that, if approved, could represent a next-generation-type drug. Although this means handing over up-front cash to its partners, it could be well worth it if even a handful of its partnerships turn into blockbuster drugs.

With a growing line of products (not just Revlimid), double-digit sales growth for the next three years, and the company calling for at least $12.50 in EPS by 2020, Celgene looks to be among the most attractive drug stocks.

Dollar signs in prescription drug packaging.

Image source: Getty Images.

Jazz Pharmaceuticals

Finally, if you want a cheap drug stock for 2019, take a closer look at Ireland-based specialty drugmaker Jazz Pharmaceuticals.

Like Celgene, Jazz Pharmaceuticals has a pretty heavy reliance on a single drug: Xyrem. In the company's third-quarter operating results, narcolepsy drug Xyrem accounted for 76% of the $469.4 million in total sales. Sure, it's a bit unnerving that Xyrem is such a big part of Jazz, but it's not as if things aren't looking bright. Jazz has successfully defended Xyrem against potential generic entrants via settlements, and has had little trouble passing along substantial list-price hikes to further boost its sales. In the third quarter, Xyrem sales grew by a healthy 18% from the year-ago quarter.

At the same time, Jazz has an up-and-coming product portfolio and pipeline beyond just Xyrem. Vyxeos, a treatment for patients with a certain types of acute myeloid leukemia with a poor diagnosis, was approved by the Food and Drug Administration last year and could be on pace for more than $100 million in full-year sales in 2018. At its peak, Vyxeos could climb beyond $200 million in peak annual sales.

Jazz is also doing what it can to reward patient investors. Having completed a $640 million share buyback, the company's board recently authorized up to an additional $400 million in repurchases. As a reminder, as a company's share count declines, it can have a positive impact on earnings per share. And when it comes to Jazz Pharmaceuticals, its annualized EPS growth of nearly 15% through 2021 and its forward P/E of eight are tough to beat.