7 Cheap Beginner Stocks to Invest In

2. Merck & Co., Inc. (NYSE:MRK)

Forward P/E Ratio: 14.37 

Earnings Growth This Year: 433.80% 

Number of Hedge Fund Holders: 96 

Merck & Co., Inc. (NYSE:MRK) is a leading pharmaceutical company based in the United States that specializes in both Human health and Animal health. The company is and has been one of the favorite investments due to its high return rates. It has delivered more than 72% during the last 5 years, mainly due to its strong performance Keytruda immunotherapy drug, which is a standard care for various kinds of cancer.

Keytruda has proven to be a game changer for Merck & Co., Inc. (NYSE:MRK) with $26.3 billion in sales during the past year. The drug represents around 50% of the company’s pharmaceutical business. During the second quarter alone, its sales grew 16% year-over-year to reach $7.3 billion, while the overall sales of the company stood at $16.1 billion.

However, there is a slight twist to the story. Keytruda’s formulation patent for the company is set to expire in 2028, meaning Merck & Co., Inc. (NYSE:MRK) could lose its economic moat in a decade. Should you be concerned as an investor?

The concern can be valid as the cancer drug has been a significant winner for the company, however, management has been focused on advancing its pipeline and landing new approvals to diversify its portfolio.

It recently got its new medicine, a pneumococcal conjugate vaccine for adults approved by the FDA. Moreover, it launched another vaccine for patients with pulmonary arterial hypertension, which generated more than $70 million in sales from its approval in March to August, when the second quarter results were announced.

In addition, Merck & Co., Inc. (NYSE:MRK) has also been actively acquiring new businesses to expand its reach. Management, recently acquired EyeBio, helping the company progress with its retinal treatment medicines. Within the animal care segment, the company acquired Elanco’s aqua business.

The stock is also trading at a 34% discount to its sector, with earnings expected to grow by a staggering 433.80% during the year. Thereby justifying its inclusion among the best cheap beginner stocks to invest in.

Carillon Eagle Growth & Income Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its first quarter 2024 investor letter:

“After posting lackluster returns in 2023, Merck & Co., Inc. (NYSE:MRK) got off to a strong start in January by raising the long-term sales forecasts for its oncology and cardiology pipelines and reporting solid fourth-quarter results, coupled with strong financial guidance for 2024. Merck shares also finished the quarter strong after receiving U.S. Food and Drug Administration approval in late March for a new cardiology medicine with the potential to contribute significantly to sales growth over the next several years.”