Cheap stocks could be a smart investment opportunity, as economists predict further rate cuts in 2025, providing a chance to purchase undervalued assets in sectors like medical, semiconductor, and energy at a discount. Stocks in growing industries, especially those priced lower, may offer substantial upside potential as these companies expand.
Therefore, investors might want to consider fundamentally strong, cheap stocks like Pfizer Inc. (PFE), Micron Technology, Inc. (MU), and Precision Drilling Corporation (PDS), which have high analyst price targets for 2024.
Companies with lower stock prices often see larger percentage gains than higher-priced stocks during growth periods. Stocks priced low due to temporary market inefficiencies or sentiment shifts can rebound as fundamentals improve. Additionally, low-priced stocks often form patterns that attract technical analysts, driving increased demand and offering potential for significant price appreciation.
Fed is expected to cut interest rates by 25 basis points this December, potentially boosting the stock market. Lower rates can reduce borrowing costs, stimulate investment, and raise stock prices, especially for cheap stocks. Despite inflation concerns, the U.S. economy is projected to grow at 2.1% next year, creating a favorable environment for businesses, including those with lower stock prices.
Considering these trends, let’s assess the fundamentals of the abovementioned cheap stocks.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the U.S., Europe, and internationally.
On November 20, 2024, PFE announced the European Commission's approval of HYMPAVZI (marstacimab) as the first once-weekly subcutaneous treatment for severe hemophilia A or B without inhibitors. It is also the first hemophilia medicine in the EU administered via a pre-filled pen or syringe, showing significant efficacy in reducing bleeding rates.
On October 22, 2024, PFE announced FDA approval of ABRYSVO, the first RSV vaccine for adults aged 18-59 at high risk of RSV-related lower respiratory tract disease, expanding its indications to younger adults. It remains the only RSV vaccine approved for pregnant individuals to protect infants from birth to six months.
In terms of forward non-GAAP P/E, PFE’s 8.75x is 57.9% lower than the 20.77x industry average. Its 8.20x forward EV/EBITDA is 37.5% lower than the 13.12x industry average. Likewise, its 10.08x forward EV/EBIT is 39.2% lower than the 16.57x industry average.
PFE’s total revenues for the fiscal third quarter, which ended September 30, 2024, rose 31.2% year-over-year to $17.70 billion. Likewise, its Biopharma revenues were $17.39 billion, up 31.9% from the prior-year quarter. Moreover, the company’s adjusted net income and adjusted EPS attributable to PFE common shareholders totaled $6.05 billion and $1.06 for the quarter, respectively.
Street expects PFE’s EPS and revenue for the quarter ending December 31, 2024, to increase 369.1% and 21.2% year-over-year to $0.47 and $17.27 billion, respectively. PFE surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past month, the stock has declined 4.3% to close the last trading session at $25.58. The average analyst price target of $31.75 indicates a 24.1% upside potential.
PFE’s POWR Ratings reflect robust prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE is ranked #27 out of 153 stocks in the Medical – Pharmaceuticals industry. It has an A grade for Growth and a B for Value and Sentiment. To see PFE’s Momentum, Stability, and Quality ratings, click here.
Micron Technology, Inc. (MU)
MU designs, develops, manufactures, and sells memory and storage products internationally. The company operates through four segments: the Compute and Networking Business Unit, the Mobile Business Unit, the Embedded Business Unit, and the Storage Business Unit.
On November 12, 2024, MU announced the Micron 6550 ION E3.S SSD, the world's first PCIe Gen5 60TB SSD. This innovative storage device offers best-in-class performance, energy efficiency, and density, addressing the growing demands of AI and exascale data centers.
On October 15, 2024, MU announced the launch of its Crucial DDR5 CUDIMM and CSODIMM memory solutions, offering speeds up to 6,400 MT/s for enhanced AI PC and workstation performance. These are the first JEDEC-standard DDR5 clock driver modules, validated by Intel for capacities up to 64GB.
In terms of forward non-GAAP PEG, MU’s 0.23x is 88.1% lower than the 1.92x industry average. Likewise, its 11.68x forward non-GAAP P/E is 55.7% lower than the 26.38x industry average. Also, its 3.11x forward EV/Sales is 4.3% lower than the 3.25x industry average.
During the fourth quarter ended August 29, 2024, MU's revenue increased 93.3% year-over-year to $7.75 billion. The company’s non-GAAP operating income was $1.75 billion, compared to an operating loss of $1.21 billion in the same quarter of the previous year. Additionally, the company’s non-GAAP net income and EPS were $1.34 million and $1.18, respectively.
For the quarter ended November 30, 2024, MU’s revenue is expected to increase 84.3% year-over-year to $8.71 billion. Its EPS for the quarter ending February 28, 2025, is expected to rise 363.4% year-over-year to $1.95. MU surpassed the Street EPS estimates in three of the trailing four quarters.
Over the past year, MU’s stock has gained 28.5% to close the last trading session at $102.50. The average analyst price target of $153.05 indicates a 49.3% upside potential.
MU’s strong fundamentals are reflected in its POWR Ratings. It has an A grade for Growth. Within the Semiconductor & Wireless Chip industry, it is ranked #23 out of 90 stocks. To access the additional POWR Ratings of MU for Value, Momentum, Stability, Sentiment, and Quality, click here.
Precision Drilling Corporation (PDS)
Headquartered in Calgary, Canada, PDS is a drilling company that provides onshore drilling, completion, and production services to exploration and production companies in the oil, natural gas, and geothermal industries across North America and the Middle East. The company operates through its Contract Drilling Services and Completion and Production Services segments.
In terms of forward Price/Sales, PDS’ of 0.62x is 57.2% lower than the 1.45x industry average. Its 8.28x forward EV/EBIT is 22.3% lower than the 10.66x industry average. Likewise, its 9.28x forward non-GAAP P/E is 23.3% lower than the 12.09x industry average.
PDS’ revenue for the third quarter, which ended on September 30, 2024, increased 6.8% year-over-year to $477.16 billion. The company’s adjusted EBITDA rose 24.3% year-over-year to $142.42 million. For the same period, its net earnings amounted to $39.18 million and $2.31 per share, up 98% and 59.3% over the prior-year quarter, respectively.
Analysts expect PDS’ EPS for the quarter ending March 31, 2025, to increase 10.4% year-over-year to $2.04. Its revenue for fiscal 2025 is expected to grow 3.3% year-over-year to $1.41 billion. Over the past year, PDS’ stock has gained 15.4% to close the last trading session at $60.35. The average analyst price target of $87.60 indicates a 45.2% upside potential.
PDS’ POWR Ratings reflect this positive outlook. PDS has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is ranked first out of 13 stocks in the Energy - Drilling industry. It has an A grade for Value and a B for Quality. In addition to the POWR Ratings grades I’ve just highlighted, you can see PDS’ ratings for Growth, Momentum, Stability, and Sentiment, here.
What To Do Next?
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PFE shares were trading at $25.38 per share on Monday afternoon, down $0.20 (-0.78%). Year-to-date, PFE has declined -5.13%, versus a 29.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
3 Cheap Stocks With High Analyst Price Targets for 2024 StockNews.com
