It'd be nice to have hundreds of thousands of dollars handy to start investing in stocks, but it's by no means a requirement. Investing on a budget can be highly profitable, especially if investors pick attractive stocks and regularly add to their positions.
In what follows, we'll look at two stocks that are changing hands for well under $100 per share and that look attractive at current levels: Pfizer (PFE 0.23%) and Teladoc Health (TDOC 3.31%). Here's why these healthcare companies are worth more than a second look.
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1. Pfizer: $53.26 per share
Pfizer's coronavirus lineup alone will likely generate more sales than most pharmaceutical companies this year. The drugmaker projected that it would rack up about $29 billion from its COVID-19 vaccine, Comirnaty. Meanwhile, Pfizer's newly approved coronavirus medicine, Paxlovid, could generate upward of $10 billion. Here's how we know that. In November, Pfizer agreed to deliver 10 million treatment doses of Paxlovid to the U.S. government for $5.3 billion.
That was before it had earned authorization from regulators. And after it got the green light, the U.S. government ordered an additional 10 million doses, and the U.K. obtained 2.5 million doses of the medicine. Based on these facts and figures, and even assuming Pfizer does not send out any additional shipments of Paxlovid, it seems reasonable to assume that the coronavirus treatment will generate something north of $10 billion this year.
So, in total, Pfizer's COVID-19 lineup has the potential to rack up more than $39 billion in 2022. For context, the pharma giant generated $41.9 billion in revenue in 2020.
Image source: Getty Images.
Pfizer has other non-coronavirus products that have sales growing at a rapid clip, too. During the third quarter, the company's revenue excluding its COVID-19 vaccine was $11.1 billion, increasing by a decent 7% compared to the year-ago period. Pfizer's anticoagulant Eliquis saw its increase soar by 21% year over year to $1.3 billion during the quarter, while cancer medicine Xtandi's revenue clocked in at $309 million, 16% higher than the prior-year quarter.
Pfizer's biosimilar business racked up revenue of $576 million, 36% higher than the third quarter of 2020. The drugmaker has faced issues with its rheumatoid arthritis medicine Xeljans as regulators have updated the therapy's prescribing information to include increased risks of cancer and cardiovascular events. That probably played a role in Xeljanz's revenue decrease of 7% year over year to $610 million during the third quarter. But management thinks this medicine could return to growth this year, especially as it keeps earning new indications.
Pfizer isn't just a coronavirus play, and the company is set to report another series of blowout financial results this year. And as Pfizer continues to generate tons of cash, it will help the company set itself up for the future. Pfizer ended the third quarter with $29.2 billion in free cash flow, which more than doubled compared with the year-ago period.
Expect Pfizer to go shopping for exciting pipeline candidates to add to its already long list of programs. The company currently boasts several dozen ongoing clinical trials, many of which will no doubt yield new approvals. Pfizer could also decide to reward investors by way of share buybacks or growing dividends. The company currently offers a yield of 2.95% -- which compares favorably to the S&P 500's 1.27%.
And with a forward price-to-earnings ratio of just 9.5 -- compared with the industry's average of 13.3 -- Pfizer looks like a bargain. It is hard to find something to dislike with this pharma stock.
2. Teladoc: $68.18 per share
Teladoc's stock has lost all the outbreak-related gains it made back in 2020, and the company's shares are now trading near their pre-pandemic levels. Teladoc's trajectory resembles that of many other "pandemic stocks" that performed well -- perhaps too well -- in 2020 but ended up southbound for much of last year. Was the market's reaction justified?
Here's a better question: Does Teladoc's investment thesis remain intact despite its recent struggles? In my view, the answer is a resounding yes. First, note that Teladoc has continued to record strong top-line increases and growing visits. In the third quarter, the company's revenue grew by 81% year over year to $522 million.
That was on the back of a 37% year over year increase in total visits, which clocked in at 3.9 million for the quarter. True, Teladoc continues to bleed red. During the period, its net loss widened to $84.3 million, compared with the net loss of $35.9 million it reported during the year-ago period.
Image source: Getty Images.
But it is worth noting that the company's worsening net loss was primarily due to an increase in expenses, such as amortization of intangible assets, related to the company's October 2020 acquisition of Livongo Health in a cash and stock transaction valued at $18.5 billion.
According to management, the company is reinvesting cost synergies achieved through the acquisition to fuel long-term growth, which is bad for the bottom line in the short run but could more than pay off for itself in the long run. Companies at the forefront of relatively new industries with solid tailwinds often invest heavily to carve out a niche for themselves permanently.
The telehealth industry will continue to grow rapidly in the coming years, especially since it provides benefits in terms of time (and money) savings to both patients and physicians. That's not to mention the convenience it offers consumers: Being able to consult a doctor from the comfort of one's home 24/7 is a pretty attractive selling point.
And as one of the leaders in telemedicine with a vast network of some 50,000 clinicians, Teladoc is well-positioned to take at least a small slice of the $261 billion total addressable market in the U.S. alone. Though the red ink on the bottom line isn't ideal, Teladoc's long-term opportunities and leadership in its industry justify sticking with the company for now.
While shares have been falling of late, it's impossible to know when they will hit rock bottom. After falling hard for the last 11 months, the company already looks more attractively valued than it has in the past year. That's why it's worth it to purchase its stock now while it still hovers around its 52-week low.
