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These 3 Value Stocks Are Absurdly Cheap Right Now

By David Jagielski - Updated Mar 11, 2021 at 8:28AM

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But the low prices may not last for long, because these companies' futures look bright.

Are you looking for some ridiculously cheap stocks to buy? Despite the Dow Jones Industrial Average hanging out around all-time highs, there are still some good deals out there. It isn't always easy finding them, especially since the coronavirus pandemic has crippled many businesses, making their earnings look abysmal over the past year. That is why I am going to focus on dirt-cheap stocks that are trading at incredibly low forward price-to-earnings (P/E) multiples, which factor in analyst expectations for profits next year.

Three stocks that are trading with forward P/Es of 10 or less (the current P/E for the S&P 500 is 34) that bargain hunters will want to consider buying today include AbbVie (ABBV 1.91%)Jazz Pharmaceuticals (JAZZ 3.52%), and Hewlett Packard Enterprise (HPE 2.40%). With strong fundamentals and business models that could do well in 2021, now may be a great time to buy any of these three stocks.

Man in suit checking phone in front of stock chart

Image source: Getty Images.

1. AbbVie

Healthcare company AbbVie currently trades at a forward P/E of less than nine, a bargain compared to industry giant Johnson & Johnson, which is at a multiple of 16. Shares of AbbVie have been flat thus far in 2021, up less than 1%, while the S&P 500 has risen by around 4%. But the stock could become a much hotter buy over the next 12 months, even if life doesn't return to normal just yet.

One of the reasons analysts are expecting big things from AbbVie in the year ahead is that it was only in May 2020 that the company closed on its $63 billion acquisition of Botox-maker Allergan. The company has already started to see a boost in its numbers from that acquisition. When it released its year-end earnings report on Feb. 3, its net sales for the full year of 2020 totaled $45.8 billion, a 37.7% increase from the previous year.

The Allergan acquisition was key to that growth, as there were numerous segments of AbbVie's business that didn't report sales a year ago, including Aesthetics, which brought in $2.6 billion -- and that wasn't a full year's worth of revenue. Top-selling drug Humira continued to generate solid organic growth as it generated $19.8 billion in revenue for 2020, which was up 3.5% year over year. 

AbbVie's products span many different areas, from immunology to neuroscience to eye care and others. That diversification makes the stock an attractive long-term buy. With its shares still looking cheap and this Dividend Aristocrat paying a yield of 4.5%, it makes for a solid addition to any portfolio right now.

2. Jazz Pharmaceuticals

Jazz Pharmaceuticals is trading right around a forward P/E of 10, and it is another top healthcare stock you can buy today. In 2020, the company's top line grew by 9% to $2.4 billion. Single-digit revenue growth isn't all that exciting, and Jazz wouldn't be nearly as attractive a buy if not for its planned $7.2 billion acquisition of GW Pharmaceuticals (GWPH). The fast-growing cannabis stock will give Jazz's top line a shot in the arm. 

GW Pharma is known for its cannabis-based drug, Epidiolex. It makes up nearly all of the company's sales. In 2020, GW reported revenue of $527.2 million -- a 69.3% increase from the $311.3 million it generated in the previous year. And Epidiolex itself brought in $510.5 million. Although the company incurred a loss of $58.1 million during the year, Jazz's strong bottom line will help offset that -- it reported $238.6 million in profit last year with diluted earnings per share (EPS) of $4.22. But for 2021, the company is projecting those diluted per-share profits to come in between $8.30 and $10.45.

Jazz doesn't offer a dividend, but it could still become a great investment. Down 1% year to date, there hasn't been much bullishness on the stock, and that could change, as the company is eyeing a stronger year ahead.

3. Hewlett Packard Enterprise

Outside of healthcare, Hewlett Packard Enterprise can help diversify your holdings while also allowing you to tap into the growing demand for data analysis. Its forward P/E ratio is just over eight, and that is even with the stock climbing more than 28% in 2021. 

Hewlett Packard reported its first-quarter numbers on March 2 for the period ending Jan. 31, in which sales of $6.8 billion declined 2% year over year but still came in better than the company's expectations. The one high-growth area for the company was in Intelligent Edge, which enables businesses to quickly analyze real-time data. In Q1, the segment generated $806 million and was 12% higher than it was a year ago.

As companies are getting leaner, cutting staff, and looking for ways to get by with less, data analysis is going to be more important than ever in making good decisions, which is why the growth in Intelligent Edge could remain strong for the foreseeable future. Hewlett Packard is bullish on the year ahead and has raised its guidance for net EPS, projecting between $0.48 and $0.66 in per-share profits (previously it was forecasting a range of $0.38 to $0.56).

That would be a big improvement from fiscal 2020, when Hewlett Packard incurred a loss for the year. In fiscal 2019, its diluted EPS was $0.77.

The tech company currently pays a quarterly dividend of $0.12, which yields 3.17%. The company last declared an increase to the dividend in October 2019. But with a better outlook ahead, it wouldn't be surprising to see Hewlett Packard get back to boosting its payouts soon. The dividend, along with a cheap price and solid growth prospects, makes this one of the better stocks to buy right now.

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Stocks Mentioned

AbbVie Inc. Stock Quote
AbbVie Inc.
$151.96 (1.91%) $2.85
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,928.62 (0.00%) $0.00
Johnson & Johnson Stock Quote
Johnson & Johnson
$179.62 (-0.98%) $-1.78
Jazz Pharmaceuticals plc Stock Quote
Jazz Pharmaceuticals plc
$148.01 (3.52%) $5.03
GW Pharmaceuticals plc Stock Quote
GW Pharmaceuticals plc
Hewlett Packard Enterprise Company Stock Quote
Hewlett Packard Enterprise Company
$14.91 (2.40%) $0.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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