The bull market has had a variable impact for stocks across a range of industries the last few years. While some companies have ridden the bull market waves, others have retreated or been beaten down by the market at large for one reason or another.
Even if you have a more modest amount to invest, say $200, there are still quality businesses begging to be bought in the current environment. Sometimes, these stocks are discounted as fickle investor sentiment prevails, but they can still be superior long-term buys. Here are two such names to consider for your portfolio.
1. Pfizer
Pfizer (PFE 0.23%) has definitely struggled in the last few years after its exceptional performance during the height of the COVID-19 pandemic as a result of its vaccine and oral antiviral drug. While the tailwinds from those products have long died down, there's plenty to like about this business if you're a long-term buy-and-hold investor. Pfizer remains one of the top healthcare companies in the world, with a portfolio of blockbuster as well as emerging vaccines, and medicines in disease areas including oncology, hematology, and immunology.
The company went on an acquisition streak with the billions in revenue and profits raked in from COVID-19 products. One notable acquisition was of cancer drugmaker Seagen for a cool $43 billion, a purchase that has been integral in management's goal to have eight or more blockbuster oncology drugs in its portfolio by 2030. Pfizer intends to achieve this goal through a combination of new drugs and additional indications for existing ones. Management is also planning to double the number of patients being treated with its cancer drugs by that time frame, from its current figure of about 2.3 million lives.
The company's oncology division will be focusing primarily on various breast cancers, genitourinary cancers, blood cancers, and thoracic cancers, areas where it already has approved drugs, but with varying levels of penetration. Management has previously said the Seagen acquisition alone could add $10 billion in additional annual revenue to Pfizer's top line by 2030. Oncology drugs are just one part of Pfizer's growth strategy, though.
The company has been aggressively cutting costs, and hopes to achieve $4 billion in net cost savings in 2024 alone. The company's recent acquisitions have also brought new medicines like Nurtec, a migraine therapy developed by Biohaven Pharmaceuticals, which is now a part of Pfizer. Nurtec was first approved by the U.S. Food and Drug Administration in 2020, and became the first in a class of drugs known as calcitonin gene-related peptide (CGRP) receptor antagonists available in a fast-acting orally disintegrating tablet (ODT).
Nurtec is estimated to have peak annual sales potential in the ballpark of $6 billion. It is racing toward that runway, delivering $213 million in revenue in 2022 and $928 million (just shy of the requirement to hit blockbuster status) in 2023. Current Pfizer blockbusters include blood thinner Eliquis, as well as the Vyndaqel family of drugs (used to treat cardiomyopathy of wild-type or hereditary transthyretin-mediated amyloidosis), and the Prevnar family of pneumococcal vaccines, which can be used to prevent pneumonia, meningitis, and sepsis.
In the most recent quarter, revenue grew 3% operationally even with waning COVID-19 product sales factored in. If you exclude these products, Pfizer's top line grew 14% operationally, which is a pretty great growth rate when you're looking at a business at this level of maturity and scale. Total revenue came to $13.3 billion, while profits totaled $42 million for the three-month period.
Pfizer is also a faithful dividend payer. Because investor appetite toward shares has dampened significantly, its dividend yield has risen to a juicy 5.8%. Income investors looking to invest in an established healthcare company and enjoy some dividend returns to boot can still find plenty of green flags for this business.
2. e.l.f Beauty
E.l.f Beauty (ELF -2.40%) has had a bumpy ride in recent months, with shares currently down about 25% since the start of the year. The cosmetics retailer is likely dealing with mixed investor sentiment due to a range of factors, including shifts in consumer spending patterns, uncertainty about the current macro environment that is trickling down to a numerous growth-oriented stocks, and how inflation could impact growth rates.
That being said, e.l.f. continues to do extremely well from a financial perspective. It regularly reports growth rates in the double digits, and even some of its more moderate projections for growth for the current fiscal year still targets a 25% to 27% revenue increase from the prior one.
E.l.f. beauty has garnered renewed interest from a new generation of consumers in recent years with its popular TikTok campaigns and celebrity-driven advertising campaigns. The company currently controls a roughly 12% share of the U.S. color cosmetics market, while its total international penetration compared to beauty brand peers is just 16%.
These figures are impressive for a brand like e.l.f. that has long stood up to the competition of more established mass beauty retailers with its high-quality, vegan, and affordable products. E.l.f. Beauty has expanded exponentially through the years from lucrative partnerships with retailers like Target, Walmart, and Ulta Beauty; growth of its own personal brands; and acquisitions of third-party brands.
Currently, the company is one of the top cosmetic brands sold at Target, accounting for over 21% of cosmetics sales for the retailer in e.l.f.'s first quarter of fiscal 2025. Apart from e.l.f. cosmetics, the company also boasts brands including e.l.f. SKIN, Keys Soulcare, Naturium, and Well People. Management estimates that the company has only penetrated approximately 2% of the skincare market at present, despite expanding consumption in the mass skincare category by 45%.
In e.l.f.'s fiscal Q1, ended June 30, the company brought in net sales of $324.5 million, up 50% year over year. Net income came in just shy of $48 million for the quarter, while the company had $109 million in cash on hand at the end of the period. Investors might be underestimating the growth potential of the stock over the next three to five years, but that could present an opportunity for some to buy shares on the dip.
