You might think that stocks are expensive with the longest bull market in history still going strong. And you'd be right -- for the most part.

But even with overall valuations continuing to rise, there are still plenty of stocks that defy the norm. Three healthcare stocks, in particular, are incredibly cheap right now: Celgene (NASDAQ:CELG), Health Insurance Innovations (NASDAQ:HIIQ), and Jazz Pharmaceuticals (NASDAQ:JAZZ). Here's why these three stocks are so cheap and whether or not they're smart picks to buy.

Men holding giant jigsaw puzzle pieces, one with a light bulb drawing and the other with a dollar sign

Image source: Getty Images.

1. Celgene

Celgene stock looks cheap no matter how you look at it. The biotech's shares trade at only 7.4 times expected earnings. Its price-to-earnings-to-growth (PEG) ratio is a super-low 0.52. 

What's more, Celgene's shares are trading well below the total value of the pending acquisition of the company by Bristol-Myers Squibb (NYSE:BMY). That transaction includes $50 in cash and one BMS share for every Celgene share owned. In addition, there's a contingent value right (CVR) share for another $9 if three of Celgene's pipeline candidates win FDA approval by specified dates. 

So why is Celgene dirt cheap? Investors are still concerned about its dependence on Revlimid, which faces generic competition in the not-too-distant future. They're also not happy that BMS will have to sell off blockbuster immunology drug Otezla to address Federal Trade Commission concerns over the acquisition. 

2. Health Insurance Innovations

Health Insurance Innovations looks even more attractively valued than Celgene based on forward earnings multiples. Shares trade at just over five times expected earnings. Health Insurance Innovations' PEG ratio of 0.67 is also really low.

The stock's valuation is so low primarily because of Health Insurance Innovations' business model. The company operates a cloud-based technology platform for buying health and life insurance. With several leading presidential candidates promoting a single-payer healthcare system that could pretty much wipe out the health insurance industry, there's a lot of uncertainty about Health Insurance Innovations' future. The company also depends heavily on the sale of short-term medical (STM) plans. These plans have come under attack from some in Congress.

In addition to these worries, Health Insurance Innovations is battling several lawsuits alleging that the company made false or misleading statements related to regulatory compliance matters. It has also become embroiled in a controversy over its connection with third parties who allegedly used deceptive tactics to sell the company's products.

3. Jazz Pharmaceuticals

Jazz Pharmaceuticals stock trades at eight times expected earnings. Its PEG ratio stands at 0.6, making it one of the cheapest healthcare stocks on the market with potential growth factored in.

One key reason behind Jazz's low valuation is that the biotech relies heavily on one drug -- and that drug could soon face stiff competition. Sleep-disorder drug Xyrem generates over 70% of Jazz's total revenue. Generic rivals for Xyrem will hit the market in 2023. Xyrem could also see increased competition from new entrants to the market. 

However, Jazz won FDA approval earlier this year for sleep-disorder drug Sunosi. The biotech also reported positive results from a late-stage study evaluating experimental drug JZP-258 in treating cataplexy (a sudden muscle weakness or paralysis while remaining conscious) and excessive daytime sleepiness in patients with narcolepsy. Both drugs could help Jazz reduce its dependence on Xyrem.

Are they buys?

I think that two of these three cheap healthcare stocks are decent long-term picks for investors. Let's look at each one in order from least to most attractive. 

Health Insurance Innovations has plenty of opportunities to deliver strong growth. However, I'm leery of the stock while there's even a possibility that the health insurance industry could be obliterated. It's also quite possible that STM plans could be tossed out the window if there's a change of power in Washington.

I like that Jazz is on track to reduce its dependence on Xyrem. My hunch is that the biotech will be able to deliver impressive revenue and earnings growth over the next few years. There's a possibility that drug pricing reform in Washington could hurt Jazz's prospects, but I still view the stock as a good bargain buy.

What about Celgene? I don't think it's too late at all to buy the stock even with the BMS acquisition likely to close in the near future. If I had to choose only one of these three cheap healthcare stocks, it would be Celgene.