Share price has nothing to do with whether a stock is fairly valued. However, it is nonetheless an important consideration for investors on tight budgets.
With that in mind, three Fool.com contributors have identified what they think are magnificent pharmaceutical stocks under $100 to buy right now. Here's why they picked AstraZeneca (AZN 9.92%), Novo Nordisk (NVO 6.57%), and Pfizer (PFE 6.79%).
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AstraZeneca is a growth beast that also pays a solid dividend
David Jagielski (AstraZeneca): One of the best healthcare stocks you can buy for less than $100 right now is AstraZeneca. It has become one of the largest healthcare companies in the world, and it's gearing up for much more growth in the future. Over the years, it has been building up its portfolio of drugs through acquisitions.
Its pipeline currently features nearly 200 projects, a staggering amount that gives the company plenty of room to grow its top and bottom lines. Even among phase 3 trials, it has more than 20 projects currently ongoing. While not all of them will lead to approvals, it's a great example of AstraZeneca's commitment to growth. Its portfolio is also incredibly diverse, as it spans many therapeutic areas, including oncology, cardiovascular, respiratory, rare diseases, and others.
By the end of the decade, the pharma company aims to grow its annual revenue to $80 billion, which is a significant increase from where it is today. Over the trailing 12 months, the company has generated $56.5 billion in sales.
Another great reason to invest in the company is for its dividend, which yields 2% and is higher than the S&P 500 (^GSPC 0.34%) average of just 1.2%. AstraZeneca is the type of blue-chip stock you can buy and forget about, given its constant pursuit of innovation and growth, and with regular dividend income, it gives you plenty of incentive to hang on.
The sell-off may have gone too far
Prosper Junior Bakiny (Novo Nordisk): Admittedly, things have been challenging for Novo Nordisk over the past year. The company's sales growth rates declined, and it revised its revenue or earnings guidance downward several times due to lower-than-expected sales of some of its therapies. Clinical setbacks also led to a decline in the stock, and the company decided to part ways with its longtime CEO.
Even with all these issues, though, Novo Nordisk's sell-off over this period seems a bit too much. The company's shares are changing hands for just under $59 apiece right now, but they also appear to be a bargain when considering their forward price-to-earnings ratio of 14.2, which is below the healthcare industry average of 16.5 as of this writing.
Novo Nordisk's prospects over the next five years also look pretty strong. The company's biggest growth drivers, Ozempic and Wegovy, should continue performing well, particularly thanks to recent and upcoming label expansions. Wegovy has earned approval for treating metabolic dysfunction-associated steatohepatitis, while an oral formulation of semaglutide (the active ingredient in Wegovy) is nearing approval.
Novo Nordisk has several other candidates in late-stage studies or awaiting regulatory approval. The Denmark-based pharmaceutical giant should remain one of the leaders in the GLP-1 market that is projected to grow rapidly at least through the end of the decade.
So, Novo Nordisk may have lagged behind broader equities over the past 12 months, but the stock appears attractive at its current levels. In my view, it is one of the best healthcare stocks to buy for under $100.
A big drugmaker that's underrated
Keith Speights (Pfizer): Can a company with a market cap of $135 billion and annual revenue of more than $60 billion be underrated? Absolutely. Pfizer is a perfect case in point, in my view.
This big pharma stock is cheap -- and not just because its share price is below $25. Pfizer's shares trade at only 7.7 times forward earnings. Its price-to-earnings-to-growth (PEG) ratio, which is based on analysts' five-year earnings growth forecasts, is an attractive 0.96.
Many investors seem to have really low expectations for Pfizer. At first glance, that take might sound reasonable. After all, the company faces a patent cliff, with multiple top-selling products losing patent exclusivity over the next few years.
However, it's important to consider the big picture. Pfizer also has several rising stars in its product lineup. Multiple myeloma drug Elrexfio is an especially promising one. The pharmaceutical company also has a robust pipeline, with a whopping 108 programs in clinical development. Twenty-eight of them are in late-stage testing, with four others awaiting regulatory approval.
Business development deals should add to Pfizer's arsenal, too. For example, the company recently announced plans to acquire Metsera to gain access to its experimental obesity drugs.
I can't leave out Pfizer's dividend in the discussion, either. The company's forward dividend yield is a mouth-watering 7.24%. With such a lofty yield, Pfizer doesn't have to deliver a lot of share price appreciation to give investors double-digit total returns.
