If you've got $5,000 you can afford to invest with, now may be the ideal time to do so. Although the markets don't look particularly strong today due to worries over inflation and Russia's invasion of Ukraine, investors need to focus on the long term. And, historically, the markets have always bounced back from wars and inflation, along with every other obstacle the world has faced.
Currently, there are a couple of bargains in the market that might be too good to pass up. Both Pfizer (PFE -2.89%) and Meta Platforms (META -12.61%) trade at remarkably low multiples of future earnings. They are incredibly cheap investments that could provide investors with some terrific long-term returns over the years.
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1. Pfizer
Healthcare company Pfizer may not have been a growth machine in the past, but its COVID-19 vaccine has changed that. This year alone, the company projects that it will generate $54 billion in revenue from its COVID-19 vaccine and pill. The business as a whole will bring in between $98 billion and $102 billion in sales. That's 23% higher than the $81.3 billion in revenue it reported in 2021, which was already close to double the $42 billion that Pfizer's top line totaled in 2020.
The uncertainty around the business is that COVID-19 revenue could taper off and be less of a factor in the future. However, that's not about to change just yet. CEO Albert Bourla believes that a fourth dose of the vaccine is necessary to protect against variants. And for people who are immunocompromised, a fourth shot is already available. Plus, the company is working on a COVID-19 vaccine that would better protect against variants and offer protection for a year or more (currently, individuals can be eligible for a third shot five months after their second one).
Inevitably, the COVID-19 revenue will slow down for Pfizer, but the profits and cash flow it will bring in from the pandemic can help set up for its future growth (e.g., additional investments in research and development, acquisitions). This past year, its free cash flow came in just under $30 billion -- more than double the amount it recorded in 2020.
Overall, Pfizer is in an excellent position to reinvest in its business and pursue more growth opportunities, even in a post-COVID-19 world. Today, the stock trades at an incredibly cheap forward price-to-earnings ratio of just over 7. By comparison, drugmakers Johnson & Johnson and Eli Lilly trade at multiples of 16 and 31, respectively.
2. Meta Platforms
Another solid business to buy for the long haul is Meta Platforms, which owns Facebook. The social media giant has perhaps reached a peak in terms of user growth, reporting its first-ever drop in daily active users. At 1.929 billion for the period ending Dec. 31, that was slightly less than the 1.93 billion the company reported a quarter earlier.
It's marginal, but it also fell short of the 1.95 billion that analysts were projecting for the business. Plus, the company's revenue for the first quarter also proved underwhelming, with Meta expecting only between $27 billion and $29 billion in sales, compared with Wall Street estimates of over $30 billion.
Meta is also facing headwinds as a result of privacy changes from Apple, where the company has made it more difficult for advertisers to track its smartphone users, and thus, negatively impacted Meta's business -- to the tune of $10 billion in revenue this year.
However, with the business investing in the metaverse, an opportunity that Ark Invest's Cathie Wood believes may be worth trillions, Meta is planning to be a more diverse business in the future. And although there is some risk here, Meta's stock has plunged more than 40% this year (the S&P 500 is down 12% in the same period), largely due to the disappointing quarterly results and forecast. The risks surrounding Meta are effectively priced into the stock, and that could make now a great time to buy it.
At a forward P/E of just 15, this is the smallest premium that Meta's stock has traded at in the past year. Apple trades at 25 times its future profits while Alphabet is at a multiple of over 22. It's a bit of a contrarian pick today, but Meta could be an great place to invest $5,000 into today as the business isn't running out of growth opportunities anytime soon.
