Two issues holding down Pfizer might not be as significant as they seem.
Prudential’s long-term growth prospects remain solid.
Verizon’s underlying business is strong, with growth likely to accelerate in the coming years.
10 stocks we like better than Pfizer ›
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Pfizer (NYSE: PFE) stock trades at a forward price-to-earnings ratio of under 8x. To put this valuation into context, the S&P 500 (SNPINDEX: ^GSPC) healthcare sector trades at 17 times forward earnings.
When a stock is this cheap, it’s important to find out why. In Pfizer’s case, several factors are at work. Many investors are worried about the company’s looming patent cliff. The uncertain impact of the Trump administration’s trade policies on the biopharmaceutical industry has also been a big concern.
However, we can take one of those issues off the table (at least, for the most part). Pfizer recently announced a deal with the White House that exempts it from any pharmaceutical tariffs over the next three years. The company will slash the prices for many of its products and invest more in U.S. manufacturing. But the positives of eliminating the uncertainty seem to outweigh the negatives.
That patent cliff might not be as significant a problem as some think, either. Pfizer has multiple rising stars in its lineup that should largely offset any losses related to patent expirations. Its pipeline also features several highly promising programs.
In the meantime, Pfizer looks like an income investor’s dream stock. Its forward dividend yield tops 6.3%. Management remains committed to maintaining and growing the dividend, too.
Prudential Financial (NYSE: PRU) is even cheaper than Pfizer. Its forward earnings multiple currently hovers around 7.5. That’s less than half the multiple of the S&P 500 financial sector.
Sure, Prudential’s revenue and earnings have fallen recently compared to the prior year period. Most of this decline stemmed from volatility associated with the company’s variable annuities unit. However, Prudential has now exited this business.
I think Prudential’s long-term prospects remain solid. Wall Street seems to have the same view. The stock’s price-to-earnings-to-growth (PEG) ratio is only 0.58. Since this metric is based on analysts’ five-year earnings growth projections, the super-low PEG ratio indicates optimism about Prudential’s growth.
The good news is that Prudential doesn’t have to deliver exceptional share price appreciation going forward to generate double-digit total returns. Its forward dividend yield is 5.2%.
Last, but not least, is Verizon Communications (NYSE: VZ). This telecommunications giant’s shares trade at around nine times forward earnings. That’s a significantly lower valuation than its biggest rivals, AT&T (NYSE: T) and T-Mobile US (NASDAQ: TMUS) have.
Unlike Pfizer and Prudential, Verizon has delivered a decent gain for investors so far this year. This reflects the company’s underlying business strength. In the second quarter of 2025, Verizon posted the strongest year-over-year revenue growth in the wireless services industry. It also captured additional market share in broadband. As a result of this Q2 performance, the company raised its full-year guidance for adjusted earnings per share, adjusted EBITDA, and free cash flow.
Verizon’s total return this year is much higher than its share gains. That’s to be expected since the company’s dividend yields a lofty 6.3%. The telecom leader has also increased its dividend for 19 consecutive years.
To be sure, telecommunications isn’t a high-growth market. However, I expect that Verizon’s growth will accelerate over the next few years for two key reasons. First, the company should close its pending acquisition of Frontier Communications (NASDAQ: FYBR) in early 2026. Second, 6G networks should begin to roll out by 2030, creating a major opportunity for Verizon.
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Keith Speights has positions in Pfizer, Prudential Financial, and Verizon Communications. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
3 Dirt Cheap Stocks to Buy in a Market Priced for Perfection was originally published by The Motley Fool
