Most investors like to find stocks that look like good deals. And they especially like to buy these stocks at a discount when the prospects for large short-term gains are good.
The problem is, these stocks are hard to find. Yet they do exist. Here are three cheap stocks that Wall Street says will climb 43% or more over the next 12 months.
1. Jazz Pharma
Actions of Pharmaceutical Jazz (NASDAQ: JAZZ) are more than 20% below the peaks reached in June. The biotech share is trading at less than eight times expected earnings. That’s a much lower multiple than most stocks, regardless of industry.
But analysts have high expectations for Jazz. The 12-month consensus price target for the stock reflects upside potential of 43%.
Why such optimism? Rylaze, a recently approved drug for acute lymphoblastic leukemia and lymphoblastic lymphoma, appears to be a worthy successor to the company’s former product, Erwinase. Xywav received US Food and Drug Administration (FDA) approval in August for the treatment of idiopathic hypersomnia for sleep disorders. The cannabinoid epilepsy drug Epidiolex, taken over with the acquisition of GW Pharmaceuticals earlier this year, continues to generate strong sales growth.
Over 40% of Jazz’s total revenue now comes from recently launched or acquired products. The company also hopes to rack up additional success with its pipeline. Jazz plans to begin an advanced stage study of Epidiolex in the treatment of epilepsy with myoclonic-atonic seizures in the first half of 2022. He also has two advanced stage studies of nabiximols in the treatment of spasticity associated with multiple sclerosis underway with a third trial scheduled to begin this year.
Novavax (NASDAQ: NVAX) is another biotech action that’s absurdly cheap right now. Its shares are trading at less than twice expected sales in 2022 and 3.6 times expected earnings.
Unsurprisingly, Wall Street thinks Novavax stock could be a big winner in the near future. The analysts’ average price target is nearly 80% above the vaccine maker’s current share price.
This bullish outlook depends on Novavax obtaining key clearances and approvals for its COVID-19 vaccine candidate NVX-CoV2373. The company has repeatedly missed its dates for these regulatory filings. However, the delay is related to manufacturing issues rather than issues with the vaccine itself.
Novavax will certainly be behind the COVID-19 vaccine market. However, he already has several supply agreements in hand. Additionally, the company’s investigational influenza vaccine NanoFlu could give Novavax an edge over rivals in developing a combined COVID-19 / influenza vaccine.
Viatris (NASDAQ: VTRS) is arguably the cheapest of these three actions. Shares of the drugmaker are trading at just 3.6 times expected earnings with a futures price / sales multiple of around 0.9.
Pharmaceuticals have performed dismally so far in 2021, dropping nearly 30%. However, analysts expect a strong rebound. The consensus price target reflects a 49% premium over the current Viatris share price.
Viatris raised its annual targets in its second quarter update. The company’s new biosimilar to the diabetes drug Lantus and the generic version of the asthma and chronic obstructive pulmonary disease drug Symbicort are expected to be key growth drivers going forward.
Wall Street isn’t counting on strong revenue growth from Viatris next year. However, in the longer term, the company’s pipeline could produce more winners that will drive sales. In the meantime, Viatris offers a dividend yield of 3.3% that many investors will find attractive.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.