Rewards that the next bull market will bring are being built right now by farsighted investors who can find opportunities among today's discounted stocks. While there's no telling exactly when a bull market will develop, planting the seeds of success by buying some shares of cheap yet high-quality companies out there right now is a good move.
With that in mind, here are two businesses you're probably acquainted with that are priced for a no-brainer purchase -- and have a good shot at flourishing in the next bull market and beyond.
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1. Pfizer
Pfizer (PFE 2.40%) is a company that's so well-known, it can't possibly be undervalued, right? As it turns out, renown has little to do with the market's appraisal of a business' near-term growth prospects, and for Pfizer, the market is decidedly bearish about its potential to succeed over the next two years.
It isn't too surprising why, either; while its titanic haul of around $100 billion in sales in 2022 is nothing to sneeze at, its own management team expects it to make as little as $67 billion this year.
The reason: its coronavirus medicines -- including its vaccine, Comirnaty, and its antiviral pill, Paxlovid. These are among the most successful drugs ever commercialized. In total, the pair brought in $56.7 billion last year, which will be essentially impossible to beat now that the pandemic is receding and most people are vaccinated. But that doesn't mean Pfizer's future is dim, just that it'll see its top line shrink for a while until other revenue sources can pick up the slack and return it to growth.
On that note, Pfizer has 23 programs in phase 3 clinical trials, with around 16 programs in registration, awaiting the final thumbs-up from regulators at the Food and Drug Administration (FDA). Thanks to a bevy of new drug launches anticipated before the first half of 2024, it could be making as much as an additional $20 billion in annual revenue. It also just committed to acquiring the cancer drug company Seagen, which will shore up its pipeline even further over the next decade and beyond.
In terms of its valuation, Pfizer's price-to-earnings (P/E) multiple is 7.2, putting it at far cheaper than the pharma industry's average P/E of 23.1. During the next bull market, it's very likely that its valuation would expand as the market's weighting of its long-term growth potential would become more in line with reality.
And with so much sales growth on the way, it's reasonable to start investing in its shares now, before its valuation starts to burgeon again.
2. Moderna
Like Pfizer, Moderna (MRNA -0.58%) trades at a similarly low valuation (a P/E of 7.4) and for much the same reason: a hugely successful coronavirus jab that is set to see a sharp fall-off in sales. The Spikevax vaccine was Moderna's sole source of revenue in 2022, bringing in $19.3 billion. And so the next few years will see the company aiming to pioneer a handful of other products so that it can diversify and grow.
Of the 48 programs in its pipeline, Moderna has four in phase 3 clinical trials, ranging from its respiratory syncytial virus (RSV) shot to its vaccinations for cytomegalovirus (CMV) and influenza. As with Pfizer, those medicines are unlikely to allow it to challenge the scale of its top line in 2022 anytime soon, but they're a start, and the market is clearly underrating its potential to experience further growth once the coronavirus shots contract to reach their long-term sales equilibrium.
Of particular interest to investors will be Moderna's four combination vaccine programs in phase 1 clinical trials. Those programs could be massive moneymakers as they seek to vaccinate people against coronavirus, influenza, RSV, and perhaps other viruses all in one shot.
With the combination jabs, the company could create one product and effectively compete in a handful of different infectious disease markets. And since most of the viruses it's looking to immunize people against are seasonal and require annual boosting, it could make a massive base of recurring revenue -- just not as much as the bursts in 2021 and 2022.
Moderna also has a personalized cancer vaccine (PCV) candidate in phase 2 trials that it's developing with Merck. As of February 2023, the FDA granted that program a Breakthrough Therapy Designation, too, which means that it could experience compressed development timelines. If it starts to report promising late-stage data, that should provide yet another shot in the arm for Moderna's shares.
