We recently published a list of 10 Most Undervalued S&P 500 Stocks to Buy Now. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against other undervalued S&P 500 stocks to buy now.
Earlier on March 13, Michael Cuggino, President and Portfolio Manager of the Permanent Portfolio Family of Funds, appeared on CNBC’s ‘The Exchange’ and began discussing his fund’s performance. Despite a challenging market environment, his fund achieved a 4% return this year, which he attributed to diversification rather than reliance on a single asset class like gold. The portfolio includes gold, silver, diversified equities, and bonds. When asked about market reactions to tariff-related headlines, Cuggino emphasized the importance of not overreacting to daily news fluctuations. He described the market’s behavior as herky-jerky and advised investors to focus on long-term opportunities rather than reacting impulsively. His base case anticipated some turbulence due to the transition under the new administration’s economic policies. His strategy involves identifying opportunities during volatile periods rather than making significant portfolio changes.
The discussion also featured David Zervos, Chief Market Strategist at Jefferies, who provided insights on Washington’s role in market volatility. Zervos acknowledged that while policies such as tariffs, immigration reforms, and drug policies were largely unfolding as expected, the speed of changes under the current administration was surprising investors. He pointed out rapid spending cuts and layoffs in the public sector as key contributors to market unease. For instance, courts recently ordered the federal government to rehire probationary employees who had been dismissed. Zervos likened this abrupt shift to transitioning from a public-sector-reliant economy to one driven by the private sector, which is a process that has introduced significant uncertainty. Regarding tariffs specifically, Zervos downplayed their overall impact on the US economy, which he described as domestically driven. While tariffs could affect specific industries like wine or automobiles with high overseas components, he argued that broader economic trends would be shaped by deregulation, reduced business costs, and a shift toward private-sector efficiency. He warned that the speed of these transitions could lead to short-term volatility but maintained optimism about long-term productivity gains.
Methodology
We used the Finviz stock screener to compile a list of the top S&P 500 stocks that had a forward P/E ratio under 15. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
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 staff member counting pills in a pharmaceutical warehouse.
Pfizer Inc. (NYSE:PFE)
Forward P/E Ratio as of March 14: 8.62
Number of Hedge Fund Holders: 92
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, and sells a range of medicines and vaccines across various therapeutic areas. These areas include cardiovascular, infectious diseases, and oncology, with notable brands like Comirnaty, Paxlovid, and Eliquis.
The company’s oncology segment is expanding. Padcev combined with pembrolizumab has become the leading initial treatment for advanced urothelial cancer in the US, with the potential to reach three times more patients. Additionally, Braftovi/Mektovi have experienced a 27% global sales increase from the previous year. It is supported by new data showing improved survival rates in colorectal cancer. Lorbrena also saw substantial growth and has become a standard lung cancer treatment with a 37% global sales increase.
The company is aggressively expanding its oncology pipeline with ongoing Phase 3 trials for sigvotatug vedotin in lung cancer and planned studies in other cancers. A Phase 3 readout for multiple myeloma is also anticipated. In 2025, Pfizer Inc. (NYSE:PFE) will aim for multiple regulatory approvals and Phase 3 results. Recent positive Phase 3 results for breast cancer therapy vepdegestrant, combined with FDA Fast Track designation, highlight the company’s commitment to innovation and strong financial performance. It has contributed to a modest 4% price increase despite broader market challenges.
Anticipating growth from the company, Parnassus Value Equity Fund bought its stock last year and stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
Overall, PFE ranks 8th on our list of the most undervalued S&P 500 stocks to buy now. While we acknowledge the growth potential of PFE as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PFE 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.
