Investing $5,000 in these Three Inexpensive Stocks as We Approach 2025
Investing in 2025 might seem tricky with the market performing exceptionally well in 2024, pushing some stock prices sky-high. But fret not, there are still plenty of solid, reasonably-priced investments that could outperform the market in the long run. If you have $5,000 ready to invest, give some thought to Pfizer (PFE -0.43%), L3Harris Technologies (LHX -1.20%), and Dell (DELL 3.74%).
Pfizer
Pfizer shares trade at a bargain – just 9 times its projected future earnings, in contrast to the healthcare sector average at nearly 20 times. It might seem odd that Pfizer is trading so modestly, considering the company’s pharmaceutical might. But there's no reason to believe Pfizer is in trouble.
2024 saw the company report total revenues in the $61 billion to $64 billion range, a notable improvement from the $58.5 billion in 2023. The company's modest growth rate in 2025 might throw some investors off, but it's crucial not to overlook the acquisition of oncology powerhouse Seagen, which promises to fuel growth in the future.
Reasonably-priced valuations, a promising pipeline, plans to reduce costs in light of waning COVID-19 vaccine demand, and Seagen's long-term potential make this a compelling investment choice. However, Pfizer does face patent expirations on some of its top-sellers, including Eliquis and Vyndaqel, in the coming years. But with aggressive pipeline expansion, Pfizer is more than prepared for the challenges ahead.
L3Harris Technologies
As a top-tier defense contractor, L3Harris trades at a more substantial forward P/E multiple compared to Pfizer – 15 times. That's not a bad thing, though. L3Harris offers an array of command and control systems, navigation products, tactical radios, and related services. These products and services are crucial as geopolitical tensions rise.
L3Harris reported earnings per share (EPS) profit margins of nearly 6% over the preceding four quarters, demonstrating financial strength. With a Republican-controlled White House and Senate, U.S. military spending is projected to soar. Sen. Roger Wicker (R-Mississippi), the ranking Republican on the Senate Armed Services Committee, has emphasized the necessity of a "generational investment" in U.S. defense due to growing concerns from nations like China, Iran, and Russia.
L3Harris's defense-focused portfolio and expected surge in military spending position it to thrive in the upcoming years. However, be mindful that the company is not exclusively focused on defense, butts up against competition in other growth sectors.
Dell
Dell's shares trade at a reasonable forward P/E of 13, with potential growth stemming from artificial intelligence (AI). The company has made substantial advancements in its AI-focused server and networking segments, as evidenced by the recent increase in net revenue by 58%. Although its client solutions group (PC sales) saw a slight decrease, the interest in AI-capable PCs shows the potential for a significant turnaround.
The future of AI presents immense opportunities for Dell. The company's ability to capitalize on this trend could be the catalyst for substantial gains. It's worth keeping an eye on Dell shares, as AI-capable PC sales are sure to rise in the coming years.
In conclusion, whether it's the healthcare sector giant Pfizer, the defense contractor L3Harris Technologies, or the AI-focused computer giant Dell, these companies offer strong investment opportunities. All three companies have undergone significant diversification and have robust growth prospects, making them excellent choices for any long-term investment strategy.
- Despite the steep valuations in the market in 2025, Pfizer's shares remain reasonably priced, trading at just 9 times its projected future earnings.
- With the acquisition of Seagen, Pfizer's modest growth rate in 2025 might be overlooked, as it promises to fuel longer-term growth in the company.
- L3Harris Technologies, as a top-tier defense contractor, trades at a more substantial forward P/E multiple of 15 times, reflecting its strong position in the face of geopolitical tensions.
- Dell's shares trade at a reasonable forward P/E of 13, with the potential for substantial gains coming from the growth in AI-capable PC sales in the coming years.
