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Most investors like to find stocks that appear to be bargains. And they especially like to buy those discounted stocks when the prospects of significant near-term gains are good.
The problem is that such stocks are hard to find. However, they do exist. Here are three dirt-cheap stocks that Wall Street thinks will soar 43% or more over the next 12 months.
1. Jazz Pharmaceuticals
Shares of Jazz Pharmaceuticals (NASDAQ:JAZZ) are more than 20% below the highs achieved in June. The biotech stock trades at less than eight times expected earnings. That’s a much lower multiple than most stocks, regardless of industry.
But analysts have great expectations for Jazz. The consensus 12-month price target for the stock reflects an upside potential of 43%.
Why such optimism? Newly approved acute lymphoblastic leukemia and lymphoblastic lymphoma drug Rylaze appears to be a worthy successor to the company’s older product, Erwinase. Xywav won U.S. Food and Drug Administration (FDA) approval in August for treating the sleep disorder idiopathic hypersomnia. Cannabinoid epilepsy drug Epidiolex, picked up with the acquisition of GW Pharmaceuticals earlier this year, continues to deliver 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 successes with its pipeline. Jazz plans to begin a late-stage study of Epidiolex in treating epilepsy with myoclonic-atonic seizures in the first half of 2022. It also has two late-stage studies of nabiximols in treating multiple sclerosis-related spasticity underway with a third trial expected to begin this year.
Novavax (NASDAQ:NVAX) is another biotech stock that’s absurdly cheap right now. Its shares trade at less than two times projected 2022 sales and 3.6 times expected earnings.
Not surprisingly, Wall Street thinks that Novavax stock could be a big winner in the near future. The average analysts’ price target is close to 80% higher than the vaccine maker’s current share price.
This bullish outlook depends on Novavax securing key authorizations and approvals for its COVID-19 vaccine candidate NVX-CoV2373. The company has missed its dates for these regulatory filings several times. However, the holdup is related to manufacturing issues instead of problems with the vaccine itself.
Novavax will admittedly be late to the party in the COVID-19 vaccine market. It already has multiple supply deals in hand, though. In addition, the company’s experimental flu vaccine NanoFlu could give Novavax an advantage over rivals in developing a combination COVID-19/flu vaccine.
Viatris (NASDAQ:VTRS) stands as arguably the cheapest of these three stocks. Shares of the drugmaker trade at only 3.6 times expected earnings with a forward price-to-sales multiple of around 0.9.
The pharma stock has performed dismally so far in 2021, falling nearly 30%. However, analysts expect a strong rebound. The consensus price target reflects a 49% premium to Viatris’ current share price.
Viatris raised its full-year guidance in its second-quarter update. The company’s new biosimilar to diabetes drug Lantus and generic version of asthma and chronic obstructive pulmonary disease drug Symbicort should be key growth drivers going forward.
Wall Street isn’t counting on much revenue growth for Viatris next year. However, over the longer term, the company’s pipeline could produce more winners that boost 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 writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.