Image Source: Amgen

It's rare that you can use the words "biotech" and "cheap" in the same sentence, but the recent sell-off in the market has created some interesting opportunities for biotech investors who like to focus on the long run.

Biotech blue chip Amgen (AMGN 2.35%) hasn't been spared from the carnage, and its stock is now down more than 16% in the past month alone.

AMGN Chart

There's no telling when the stock may bottom out, but investing in strong companies that are temporarily out of favor is a great long-term strategy.

So after the recent fall, is it safe to say that Amgen's stock is cheap? Here are three metrics that say the answer is yes.

1. Dividend yield
You may not think of a biotech as a potential income investment, but Amgen isn't a typical biotech. Amgen started dishing out cash back to shareholders in 2011, and it's been generously raising the dividend since, with a 30% increase in 2014 alone.

A combination of a rising dividend payment and a falling share price has increased Amgen's yield to more than 2% for the first time.

AMGN Dividend Yield (TTM) Chart

2. Price-to-earnings ratio
Most investors are familiar with the price-to-earnings ratio, which divides stock price by net income on a per-share basis. It's not a perfect measure of value, but it can give investors a rough idea of how the market is valuing the company.

Over the past 12 months, Amgen's P/E has fallen to around 19, which is near its 52-week low -- the lowest it has been in the last year. It's an even cheaper 15 when you look at the forward P/E ratio, which divides the share price by analysts' estimates of what the company will earn in 2016.

AMGN PE Ratio (TTM) Chart

3. Price-to free cash flow
Perhaps my favorite metric here is price-to-free cash flow, which divides share price by free cash flow per share. I tend to favor free cash flow over earnings because it's an actual measure of the cash that hits the company's bank account, and it's from this cash generation that the company invests in capital expenditures, pays a dividend, and buys back stock.

Amgen is currently trading for under 14 times the amount of free cash flow it generated in the past 12 months, right near another low for the past year.

AMGN Price to Free Cash Flow (TTM) Chart

Cheap for a reason?
Amgen's stock may be down on its luck solely because of the craziness in the markets, but that doesn't mean buying now is a risk-free endeavor. In fact, we're about to enter an interesting time in Amgen's history, as the first biosimilar drug, a knockoff of Amgen's Neupogen, was just recently cleared for sale. This approval could be a threat to Amgen's long-term revenue, as biosimilars are sold at a discount and over the long term could steal market share away from Amgen's products.

In addition, Neulasta, another blockbuster Amgen product, loses patent protection in October, so it, too, could be ripe target for a biosimilar competitor. 

Amgen is aware of the biosimilar threat and hasn't been sitting still. In fact, the company has aggressively moved to build up its own biosimilar war chest. It boasts nine biosimilar drugs in its pipeline that could one day compete head to head with branded drugs that rang up more than $52 billion in sales last year.

Is Amgen a buy?
Amgen isn't without its risks today, but given the company's pipeline, dividend, and biosimilar opportunity, I'm inclined to call the shares a buy today, especially now that the market is offering us the shares at a discount.