We recently published a list of 10 Dirt Cheap Stocks To Invest In Now. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other dirt cheap stocks to invest in now.
Investor’s Guide to Navigating the Volatilitc
The stock market has been experiencing volatility and has quickly shifted from the post-election highs to being priced for recession. As of April 8, the S&P 500 had declined 19% from the all-time highs. The magnitude of this fall is slightly shy of the bear market threshold, thereby creating a sense of confusion for the investors to pave their way forward. To talk about the investment strategy during times of volatility, Prime Capital Financial CIO Will McGough joined Yahoo Finance on April 11 for an interview.
McGough noted that they have been telling their clients and advisors to prepare for the volatility before the start of 2025. This is partly due to the new regime in Washington DC and its policies. However, more importantly, the market has had two really great years with more than 20% gains back to back, as a result, the price-to-earnings ratios were extended to historical extremes and earnings growth was delivering around 15% to 20%. These figures suggested that the market was almost at its peak with very little upside potential left to explore, which pointed towards risks of volatility.
McGough presented his investment strategy during this time of volatility. He highlighted that they have been advising investors to look for diversity and increased exposure, which essentially means to be cognizant of the exposure your portfolio has in terms of growth and value stocks. He noted that if you have the “Mag Seven” in your portfolio, they are concentrated and are categorized as large-cap growth, which suggests that the portfolio should be balanced with value and dividend-paying stocks as well. McGough noted that this helps temper the volatility and provides some stability. He also highlighted that after 15 years the market is finally moving away from the Mag Seven and in this scenario, the investors simply need to look for Market Weight stocks rather than Overweight.
Another area for investors to look at is the international market. McGough pointed out that for a greater chunk of recent history, the United States market has dominated international stocks, however, the current market tightening and Trump administration policies are encouraging international stocks to increase spending and promote revenue growth. Therefore this can be a good time for investors to look ahead of the United States market into international stocks such as those based in Europe and Germany. McGough concluded that all of the market situation points towards a single mantra of being diversified rather than placing all the eggs in a single basket.
Our Methodology
To compile the list of 10 dirt cheap stocks to invest in now, we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance. Using the screener we first aggregated a list of stocks trading below the Forward P/E of less than 10 with earnings expected to grow during the year. After sorting the list by market capitalization, we cross-checked each stock’s P/E and earnings growth from Seeking Alpha and Yahoo Finance, respectively. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders, sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a person’s hand holding a bottle of pharmaceuticals.
Merck & Co., Inc. (NYSE:MRK)
Forward P/E Ratio: 8.84
Earnings Growth This Year: 17.09%
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) is another international pharmaceutical company that operates through two main segments namely Pharmaceuticals and Animal Health. On April 8th, Goldman Sachs analyst Asad Haider maintained a Buy rating on the stock.
The analyst noted that the market is overly pessimistic about Merck & Co., Inc. (NYSE:MRK) and its product pipeline value. He noted that the Animal Health segment of the company generates substantial revenue while showing growth potential. Haider believes that the segment is also highly undervalued by the market.
In addition, Keytruda is one of the key drugs by the company. The sales for Keytruda in 2024 reached $29.5 billion, reflecting an 18% increase year-over-year. Moreover, the overall global sales improved by 7% year-over-year during the fourth quarter alone to reach $15.6 billion. Merck & Co., Inc. (NYSE:MRK) is one of the dirt-cheap stocks to invest in now.
Overall, MRK ranks 3rd on our list of dirt cheap stocks to invest in now. While we acknowledge the potential of MRK to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.