You get what you pay for. That’s a long-standing axiom applicable when purchasing anything — including stocks. However, thanks to the overall market sell-off, it’s quite possible to find bargain stocks right now.
Some of those discounted stocks are much less risky than others. Here are three incredibly safe value stocks to buy today.
1. Bank of America
Are bank stocks safe? You might think the answer is a resounding “no.” After all, there’s a real possibility that a recession could be on the way. If so, that would likely result in a downturn in the number of new loans.
However, some banks are well positioned to survive and thrive over the long term, regardless of what happens with the economy. Bank of America (NYSE: BAC) stands near the top of the list. It boasts one of the strongest balance sheets in the industry. BofA also ranks as one of the most tech-savvy big banks.
The stock has fallen nearly 30% year to date on rising economic fears. But that’s made Bank of America’s valuation more attractive. Shares now trade at only 9.7 times expected earnings.
Bank of America is definitely one of Warren Buffett’s favorite stocks, holding the No. 2 spot in Berkshire Hathaway‘s portfolio. It’s also well regarded by Wall Street, with the consensus one-year price target reflecting a 51% premium to the current price.
To be sure, Pfizer (NYSE: PFE) faces some uncertainty. No one knows what will happen with the COVID-19 vaccine market going forward. And the drugmaker derived more than half of its first-quarter revenue from its COVID-19 vaccine Comirnaty.
But there are reasons to be optimistic about Pfizer’s COVID-19 revenue, especially with its oral therapy Paxlovid. The company also expects to deliver solid growth outside of its COVID-19 products through 2025.
Pfizer certainly appears to be a bargain looking at its near-term growth prospects. The stock trades at around 7.3 times expected earnings. That multiple is much lower than the average forward price-to-earnings ratio of 13.5 for pharmaceutical companies in the S&P 500.
The success of Comirnaty has filled Pfizer’s coffers with cash. As of April 3, 2022, the big drugmaker’s cash position totaled nearly $23.9 billion. Pfizer has already used some of its cash to make smart acquisitions, including the $6.7 billion buyout of Arena Pharmaceuticals. Look for more deals to bolster the company’s pipeline over the next few years.
3. Verizon Communications
Verizon Communications (NYSE: VZ) didn’t give investors much to cheer about in recent years while the overall stock market was soaring. However, Verizon’s stock performance so far in 2022 has been much better than many other stocks even though it’s down a little.
The reality is that Verizon ranks as one of the best telecom stocks to buy right now. It generates strong and dependable free cash flow. It isn’t loaded to the gills with debt as some of its rivals are. The company offers an especially attractive dividend yield of over 5.2%.
Verizon is also available at a discount. Its shares currently trade at a little over nine times expected earnings.
No, Verizon probably won’t deliver jaw-dropping growth in the future. However, the company does have a great opportunity with the increased adoption of 5G networks. Verizon could be similar to the tortoise in Aesop’s fable about the tortoise and the hare. And we all know who won that race.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Bank of America, Berkshire Hathaway (B shares), and Pfizer. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Verizon Communications and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.