Stocks across a range of sectors have been feeling the market volatility over the last few years. Even as stocks have rebounded considerably in recent months -- the S&P 500 is trading up by around 20% since this time last year -- some stocks are benefiting from this bump more than others.
There are plenty of stocks that have been beaten down by negative investor sentiment but could present a compelling buying opportunity for long-term investors. Here are two such names to consider as you add more stocks to your portfolio this month.
1. Pfizer
Pfizer (PFE 0.55%) was one of the world's largest pharmaceutical companies long before the pandemic arrived. The healthcare giant may not be reporting the same mouth-watering levels of growth it was a few years ago, and investor pessimism has driven share prices down 40% over the last year alone. But it might be a significant oversight to assess that the company's best days are behind it.
Pfizer's growth has certainly slowed from a few years ago, but it has put to very good use the unprecedented billions in revenue it raked in from its COVID-19 products and deals. That cash has been used to fuel a series of acquisitions, business deals, and product development. The company expects that the new product launches it is undertaking as a result of these efforts -- seven of which happened in 2023 alone -- will be a key factor in its goal to bring in non-COVID revenue of anywhere from $70 billion to $84 billion annually by 2030.
Pfizer has plenty of irons in the fire to achieve that 2030 goal. The company is also expecting to bring in an additional $25 billion in revenue from business deals by 2030, while current cost-cutting efforts are expected to decrease outlay by around $4 billion annually by the end of this year. Pfizer's acquisition of Seagen, which closed last year, not only significantly boosted its oncology portfolio, but is also expected to add $10 billion in total revenue thanks to eight potential blockbuster products by the beginning of the next decade.
As for 2023, Pfizer reported revenue of $59 billion and net income of $2 billion. Those figures were both down notably year over year, but cutting out COVID-19 products, revenue actually grew 7% operationally from 2022. And if you compare that revenue figure to four years ago in 2019, this represents an increase of 13% on a four-year growth basis.
Pfizer is also a faithful dividend payer with a current yield of more than 6%. There's still a lot for investors to like about this stock, and those with a long-term buy-and-hold perspective may be compelled to take a second look at this mainstay healthcare business.
2. Chewy
Chewy (CHWY 2.99%) is one of the largest pet brands in the country, with an e-commerce-based business that sells everything from food to toys to bedding for pets, as well as products for larger animals like livestock. Chewy also offers a range of on-demand services including an online pet pharmacy, an online pet telehealth service, a collection of pet health insurance plans, and its own line of pet wellness products. While waning investor appetite toward this stock has seen shares plunge by about 65% over the last year, there's more beneath the surface.
In having such a diverse lineup of products and services, Chewy targets the vast majority of essential and non-essential needs that animal owners face. Chewy sells around 110,000 different products on its platform from thousands of brands. The company also launched in its first international market, Canada, last year. And it most recently announced it would be opening its first veterinary practices, called Chewy Vet Care. These locations will offer routine checkups as well as more specialized services like surgical solutions.
The pet industry is a vast and growing total addressable market, with the U.S. representing the largest segment of this space. A report released by Bloomberg Intelligence lat year found that the global pet industry is on track to reach a valuation of $500 billion by the year 2030 compared to its valuation of around $320 billion in 2023. Importantly, sales in the U.S. pet market alone are expected to hit $200 billion before the 2030s.
The report noted that a variety of factors are driving the expansion of this addressable market. These factors include more spending on pet healthcare -- which creates a circular effect of pets who live longer and therefore generate more spending for a longer period of time -- as well as rising pet ownership.
Chewy generates more than three-quarters of its revenue from recurring sales driven by its Autoship program, and 85% of revenue comes from non-discretionary spending by pet owners. Over the trailing-12-month period, Chewy has generated revenue of $11 billion and profits of $11.4 million. And its 12-month operating cash flow stands at $488 million at the time of this writing. While pet spending may continue shift in a difficult macro environment, and this can impact Chewy's financials in the short term, the company's robust foothold on a lucrative, expanding addressable market bodes well for future growth.
