You don’t need a fortune to make good money, not when many growth stocks are as cheap as they are right now. Many stocks are trading at incredibly low prices, and if you’re patient enough, you could earn an incredible return.
A couple of the most noteworthy deals out there right now are for shares of BioNTech (BNTX) and Amazon (AMZN). These stocks are down more than 35% since the start of the year, which is far worse than 23% decline that the S&P 500 has seen. Here’s why these stocks look absurdly cheap today.
Healthcare company BioNTech helped Pfizer develop a highly successful COVID-19 vaccine that has generated tens of billions in revenue. However, the German company’s shares have fallen by more than 50% this year (while Pfizer’s stock is down 21%, largely in line with the market’s decline).
As a result, BioNTech’s stock trades at a very low multiple of just two times its trailing profit. Like other vaccine makers, BioNTech has been heavily discounted by investors due to the uncertainty in its business. However, even Moderna, a rival COVID-19 vaccine maker, trades at close to four times its profits.
What I like about BioNTech is that it has a strong partnership with Pfizer; the two companies are also working on a shingles vaccine. Plus, while Moderna is working on many different versions of its COVID-19 vaccine (it has more than 10 projects in its pipeline related to COVID-19), BioNTech’s focus is more on oncology, which could offer much more sustainable, long-term revenue growth for the business.
Both stocks have their risks, but there’s more of a discount with BioNTech, and the low multiple makes the stock too cheap to ignore. Although it’s an underdog, BioNTech has plenty of potential in the long run.
Tech giant Amazon is another stock that looks like it could be a steal. It may seem odd to list a stock that’s trading at 51 times earnings as being cheap, but context is important here. In previous years, Amazon’s stock has traded at much higher multiples:
The counter to that argument is likely that Amazon’s earnings will fall in the next year due to rising costs and lower demand. And while that may be true, it’s still a short-term argument. The global e-commerce market is growing at a compound annual rate of 14.7% until 2027, according to estimates from Grand View Research.
There’s more than just e-commerce growth for Amazon to tap into these days. Amazon Web Services (AWS), its cloud business, has been its fastest-growing segment. Last year, AWS net revenue totaled $62.2 billion and increased 37% year over year while the company’s top line of $469.8 billion rose at a more modest rate of 22%.
And although the company is in the grocery business with Whole Foods, it’s just scratching the surface in terms of potential there. According to data from Euromonitor, Amazon has just a 1.2% share of the U.S. grocery market. In addition, the company has also been expanding into healthcare, recently launching a telehealth service nationwide. Amazon isn’t running out of growth opportunities anywhere, whether it’s in e-commerce, grocery, cloud computing, or healthcare.
And it has plenty of money to pump into those industries. Over the trailing 12 months, Amazon has netted a profit of more than $21 billion. Even though the business looks fairly focused on e-commerce today, investors shouldn’t neglect the potential that Amazon has in expanding further into other industries.
It may take years for the company to develop those opportunities. But if you’re willing to hang on, buying now as Amazon continues to grow its business could be a great way to invest $5,000.