The stock market is surging once again. The Nasdaq-100 in particular is up more than 36% year to date through June 29, making for one of the best performances in tech stock history over a half-year period. New investing themes such as artificial intelligence have sprung to life, lifting valuations for a great number of stocks. Investors might be feeling that they have missed the party. The good news, however, is that there are still some bargain stocks to buy for the second half of 2023, including a few companies with strong growth trends of their own.
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These are five of the best stocks to buy for this summer and beyond:
— Danaher Corp. (ticker: DHR)
— Charles River Laboratories International Inc. (CRL)
— Pfizer Inc. (PFE)
— Wells Fargo & Co. (WFC)
— Diageo PLC (DEO)
Danaher Corp. (DHR)
Danaher is a conglomerate known for its tremendous returns. A $10,000 investment in 30 years ago would now be worth nearly $1.7 million. This success is largely due to its many mergers and acquisitions and a culture of efficiency. In recent years, Danaher has sold or spun off a great number of its businesses. Following the pending spinoff of its water business later this year, Danaher will become a pure play on health care, primarily in laboratory tools and services. In particular, it is a leader in bioprocessing, which is key in developing advanced biotech therapeutics such as cell therapies. As biotech moves beyond simple compounds into personalized medicine, bioprocessing leaders such as Danaher will benefit.
DHR is also a great play on the world’s aging demographics. Danaher shares have sold off as COVID-19-related testing and vaccine development revenues disappeared. This marks a buying opportunity for long-term investors.
Charles River Laboratories International Inc. (CRL)
Charles River Laboratories, named for the river in Massachusetts, has been providing supplies to the pharmaceutical and biotechnology industries for more than 75 years. Like Danaher, it is well-positioned to benefit from the long-term growth in bioprocessing and advanced drug designs. The company is famous for producing lab specimens. It procures, breeds and delivers rats, mice and non-human primates, among others, for clinical trials. That is in part why shares are down so sharply lately, as the company got caught up in a Department of Justice investigation over its sourcing of monkeys from Cambodia. That headline-driven selling makes for a bargain entry point. The company is far more than just lab rats, as it is now one of the world’s largest contract research organizations and is also expanding its reach in drug manufacturing.
Incredibly, Charles River is involved in assisting the development of 85% of drugs that ultimately receive Food and Drug Administration approval. Charles River is a relatively low-risk way to earn a cut from the biotech industry and shares now go for just 20 times forward earnings.
[SEE: 9 Highest Dividend-Paying Stocks in the S&P 500]
Pfizer Inc. (PFE)
Pharmaceutical giant Pfizer is another entity that has sold off as COVID-related revenues trail off. It’s no secret that the company sold a ton of vaccines during the pandemic; the company’s revenues surged from about $40 billion annually in the late 2010s to a peak of $100 billion in 2022. Much of that will disappear, with analysts seeing a sharp decline in the company’s 2023 prospects. That said, Pfizer is hardly slumping back to 2019 levels of business, either. Analysts see the company bringing in $68 billion of revenue in both 2023 and 2024 respectively, which is light years ahead of the prior baseline.
Shares are selling at just 11 times forward earnings, and analysts expect the company to return to earnings growth in 2024. Pfizer shares slipped to fresh new lows recently as Pfizer dropped development of a potential weight loss drug. However, this is overblown at this point, with the stock down 30% over the past year and now selling at the same price it did back in 2019. Tack on a 4.5% dividend yield and Pfizer looks like one of the top stocks to buy now.
Wells Fargo & Co. (WFC)
Wells Fargo is one of America’s largest banks. It is well-diversified, having both a large investment bank and one of the nation’s biggest retail operations and a massive deposit base to match. The firm is also one of the largest mortgage originators in the country. That last bit has been a drag on Wells Fargo’s results as of late, as higher interest rates have slowed demand for new mortgages and refinancing transactions. However, Wells Fargo remains extremely profitable.
While higher interest rates have hurt the mortgage business, they have sharply lifted Wells Fargo’s net interest margin overall as it earns more money on its loan book. And the company should see profitability rise in future years as it is cutting back excess overhead expenses tied to remediating past legal scandals from the late 2010s. Thanks to the broader banking industry jitters, Wells Fargo shares are now being offered for less than nine times forward earnings and at a slight discount to book value. WFC stock pays a 3% dividend.
Diageo PLC (DEO)
Diageo is one of the world’s largest spirits companies. It is known for brands such as Johnnie Walker, Tanqueray, Smirnoff, Baileys, Crown Royal and other spirits, along with Guinness beer. Traditionally, investors pay a high multiple for beverage companies due to their strong profit margins, recession-resistant nature and strong brands. Spirits companies like Diageo and Brown-Forman Corp. (BF.A, BF.B) often trade for around 30 times earnings. However, a profit margin squeeze related to inflation has dimmed near-term sentiment around the spirits companies. Diageo in particular is now going for about 19 times forward earnings. That’s a bargain compared to Diageo’s historical average. Investors seeking a safe holding with excellent brands and reasonable growth prospects can take advantage as Diageo shares linger near their lowest levels since late 2020.
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5 of the Best Stocks to Buy Now originally appeared on usnews.com
Update 06/30/23: This story was previously published at an earlier date and has been updated with new information.
