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The Equity Markets Are Experiencing a Surge, Yet These Two Shares Remain Affordable Investment Opportunities

The Stock Market Experiences a Surge, Yet These Two Shares Remain Inexpensive Investment...
The Stock Market Experiences a Surge, Yet These Two Shares Remain Inexpensive Investment Opportunities

The Equity Markets Are Experiencing a Surge, Yet These Two Shares Remain Affordable Investment Opportunities

Recently, the S&P 500 reached an all-time high of over 6,000 points. This might lead you to believe that stocks could be overvalued at the moment, as the average stock in the index trades at more than 25 times its earnings. But there are still opportunities for investment.

Two potential investments that might be worth considering are AbbVie (ABBV -0.31%) and Comcast (CMCSA 0.38%).

AbbVie

Drugmaker AbbVie isn't having a spectacular year, but it's not doing poorly either. As of Monday's close, the stock had gained a modest 7% year-to-date. Although this is decent, it's nowhere near the S&P 500's more impressive 23% increase.

Initially, the stock was outperforming the broader index. However, a setback occurred when AbbVie announced last week that its schizophrenia drug, emraclidine, failed to meet its primary endpoint in a phase 2 clinical trial. Investors did not take this news lightly and sold off the stock.

For a diverse corporation like AbbVie, this is not a crippling blow to its operations or future outlook. In its latest quarter, for the period ending September 30, the company reported $14.5 billion in revenue, which increased by nearly 4% year over year. Despite a 37% decline in Humira, which recently lost its patent protection, AbbVie's business spans across immunology, oncology, aesthetics, neuroscience, and eye care.

Investors generally acknowledge that the company is no pushover. AbbVie has historically demonstrated its growth potential. While the pharmaceutical industry is inherently risky, and failures may appear in AbbVie's drug therapy pipeline, this is not a reason to become bearish on such a top stock to buy and hold. The risk-reward profile is too enticing to ignore.

AbbVie is currently experiencing a slowdown, but the company expects to return to robust growth by 2025 and anticipates growing by high-single digits per year until the end of the decade. Despite the loss of Humira's patent protection, the company has successfully replaced that revenue with Skyrizi and Rinvoq, two immunology drugs that it believes will generate a higher peak revenue than its popular rheumatoid arthritis treatment.

For long-term investors, this market dip could provide a perfect opportunity to buy AbbVie at a discount, as the stock currently trades at a forward P/E multiple of 14, which seems quite inexpensive for such a promising growth stock.

Comcast

Comcast has not seen a significant sell-off recently, but its performance has been lackluster. Since January, the stock has declined by around 2%. The Summer Olympics briefly boosted the company's revenue in the current quarter, as Comcast reported a 7% revenue increase for the period ending September 30 (a 3% decrease was reported in the previous quarter). However, this increase did not excite investors.

Looking ahead to next year, there may be a new growth catalyst to consider, and that could be the opening of Universal's Epic Universe theme park, scheduled for May. Comcast's theme park segment has struggled this year, as attendance has declined, and sales decreased by 5% in the last quarter.

However, the launch of a massive 750-acre theme park could reignite interest in an already popular tourist destination such as Orlando. According to Comcast's CEO, Brian Roberts, the new park will be "the most ambitious and technologically sophisticated theme park ever created."

Strong performance from the Epic Universe next year could make 2025 an exceptional year for this undervalued stock. Furthermore, Comcast recently announced plans to spin off its cable networks, which could make the business more appealing as an investment moving forward.

With these assets accounting for less than 6% of the company's revenue, this change will not drastically reduce the size of the business but could help in the long run by allowing the company to allocate more funds and resources to more attractive growth opportunities, such as theme parks.

Comcast is currently trading at an incredibly low forward P/E of 10, making it an intriguing contrarian buy at present.

Despite the setbacks faced by AbbVie and Comcast, investing in these companies could still be a compelling option due to their potential for growth. AbbVie's stock might be trading at a modest 7% year-to-date gain, but its diverse business segments and promising future growth plans make it an attractive investment opportunity for long-term financial strategies. Similarly, although Comcast's stock performance has been lackluster, the anticipated opening of Universal's Epic Universe theme park and plans to spin off cable networks could present valuable investment prospects with a current low forward P/E of 10. As you consider investing in the stock market, conducting thorough research and understanding the risks associated with each investment is crucial.

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