Over the past five years, biotech stocks have somewhat underperformed the S&P 500 benchmark. Controversies regarding drug pricing, the rising cost of innovation in medicine, and increased generic competition have all been chipping away at companies' bottom lines in the sector.

These risk factors have left the glass half full -- that is, they've created many bargain opportunities to buy biotech stocks at rock-bottom levels. Let's have a look at three such players -- Pfizer (PFE -0.97%)Regeneron Pharmaceuticals (REGN 1.48%), and Bayer (BAYR.Y 0.77%) -- and why they are fantastic choices for investors on the hunt for value.

Scientists studying samples in the laboratory.

Image source: Getty Images.

1. Pfizer

Pfizer has been at the forefront of tackling the coronavirus pandemic with its coronavirus vaccine, Comirnaty. The company sold $3.462 billion worth of the vaccine in the first quarter of 2021 alone, with revenue estimates of over $26 billion for the full year.

But its coronavirus vaccine isn't only a one-time boost to the company's bottom line. Recently, a real-world study from Israel found that Comirnaty's efficacy has dropped to 64% overall from 95% due to the rise of the deadly, more infectious delta variant. Similarly, the vaccine's protection against severe or critical illness went down to 93% from 100% in clinical studies. This almost guarantees the need for booster shots for future protection. 

Pfizer expects its total vaccine and biopharma sales to amount to $71.5 billion this year. That represents 70.6% year-over-year growth from its 2020 revenue after accounting for the spinoff of its generic drug business, Upjohn -- a level almost unheard-of for a large-cap company. At the same time, Pfizer anticipates its earnings per share (EPS) will increase 62% from 2020 to $3.60. 

Judging by robust vaccine demand, I think Pfizer can sustain a high degree of growth for at least the next two years. Moreover, the stock is still ridiculously cheap, at a meager 11 times price to earnings (P/E). Pfizer stock also posts an impressive dividend yield of 4% per year. 

2. Regeneron Pharmaceuticals 

Regeneron has seen some impressive growth -- and its momentum is still going. In Q1 2021, its revenue and net income grew by 38% and 78%, respectively, to $2.53 billion and $1.115 billion. Its top-performing drugs were Eylea (an injection used for treating retinal diseases), anti-allergy medication Dupixent, and cancer-fighting antibody Libtayo. The latter received regulatory clearance for treating non-small cell lung cancer and advanced basal cell carcinoma in the first half of the year.

What's more, the company also recognized $262 million in sales from its REGEN-COV COVID-19 antibody cocktail. So even though the pandemic is subsiding, the company could potentially sell the drug to over 2 million patients in the U.S. with severe underlying medical conditions as a prevention measure, especially against variants.

Overall, Regeneron is arguably one of the best growth-at-a-reasonable-price stocks to buy now. It trades at 12 times earnings, which is a low price to pay for 50% year-over-year earnings growth. Look for its partnership with Intellia Therapeutics (NTLA 0.19%) to develop in-human CRISPR gene-editing technology as the next catalyst for growth. 

3. Bayer 

Bayer subsidiary Monsanto is the largest crop science company in the world, generating 18.8 billion euros in sales each year with its line of crop protectors (excluding pesticides) and seeds/traits. Its operating income less non-cash expenses (EBITDA) margin of 24.1% leads the industry. However, litigation surrounding whether its popular herbicide Roundup causes cancer has overshadowed much of its success.

There are conflicting views regarding the matter. For example, the U.S. Environmental Protection Agency states "[there is] no evidence that glyphosate [Roundup's main ingredient] causes cancer in humans." Meanwhile, the International Agency for Research on Cancer (IARC) classifies Roundup as "probably carcinogenic." 

All this has led Bayer to set aside $9.6 billion to settle more than 125,000 lawsuits regarding the matter. The litigation is ongoing, as the disease has a 10- to 15-year latency period -- making it difficult to definitively link, or rule out, Roundup as a factor in its development.

All together, Bayer anticipates revenue and free cash flow from its crop science, pharmaceutical, and consumer health business will grow to 44 billion and 5 billion euros, respectively, by the end of 2024. Those numbers don't look that far off from the 40.5 billion euros in revenue and free-cash-flow loss of 3.5 billion euros it anticipates this year. However, keep in mind that Bayer stock is extraordinarily undervalued. It trades at a P/E of 8 and, like Pfizer, boasts a 4% dividend yield. Personally, I don't think there will be a litigation settlement until the end of the decade. That gives investors plenty of time to load up on the bargain pharma stock.