3 Absurdly Cheap Stocks to Buy for the Long Haul

Key Points

• These stocks are all down for the year, and things could get worse before they get better.

• While they have struggled recently, their long-term prospects remain promising.

• A couple of these stocks also offer some enticingly large dividend yields.

• 10 stocks we like better than Vertex Pharmaceuticals ›

Are you looking for some quality stocks to buy at decent prices? If you're looking to buy and hold for the long term, now can be an optimal time to invest in stocks that may not be doing all that well, but that still possess some great potential in the long run.

Buying stocks that the market is a bit bearish on can be a good contrarian move to take. While doing so may not be popular or seem like a good idea in the short term, if a company's fundamentals are strong, it could yield some great returns.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Three stocks that look incredibly cheap right now which you may want to consider buying are Vertex Pharmaceuticals (NASDAQ: VRTX), United Parcel Service (NYSE: UPS), and Comcast (NASDAQ: CMCSA).

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Vertex Pharmaceuticals

It's been a lackluster year thus far for Vertex Pharmaceuticals. As of Monday's close, it has declined by 2% in value. It's not a big sell-off, but it hasn't been a strong year by any stretch for the growth stock. The company has a solid cystic fibrosis business that accounts for nearly all of its top line. Through the first six months of the year, however, its growth rate has been in the single digits, rising by 7% to $5.7 billion.

But the company has many exciting long-term growth opportunities ahead. Casgevy is a gene-editing therapy for rare blood disorders (sickle cell disease, beta thalassemia) that Vertex has begun to roll out. It has the potential to become a blockbuster by the end of the decade. Earlier this year, regulators also approved Journavx as a non-opioid treatment for moderate to severe acute pain. Last year, Vertex also acquired Alpine Immune Sciences, which gave it access to povetacicept, a possible treatment for IgA nephropathy which is in late-stage trials.

There's a ton of growth potential out there for Vertex. That's why, with the stock trading at a forward price-to-earnings (P/E) multiple (based on analyst expectations) of only 20, it can be a bargain buy. In comparison, the average S&P 500 stock trades at a forward P/E of 24. For long-term investors, Vertex may be a steal of a deal right now.

United Parcel Service

The stock that's down the most on this list is United Parcel Service, better known as just UPS. Shares of the logistics company have fallen more than 30% in value this year after UPS made a controversial decision in slashing its shipments with Amazon by 50%, in an effort to improve profitability. But if it means better margins, then I think it can be a smart move for the business in the long run.

The company has been focused on trimming costs in an effort to prioritize efficiency. UPS says it's on track to save $3.5 billion in costs this year, which can help set it up for better results in the future.

The near term may be challenging for UPS, as a slowdown in e-commerce due to tariffs and rising costs could weigh on its operations. Cutting back on Amazon's deliveries will also make its top line look smaller. But the short-term pain can pay off significantly in the long run. When times are tough, it's important to buckle down and trim costs. Economic conditions will improve over time, and when they do, UPS can be in a great position to benefit from having leaner and more efficient processes in place.

Currently, the stock trades at a dirt cheap forward P/E of just 11. It's an underrated stock that comes with a mouthwatering dividend that yields 7.7%.

Comcast

Rounding out this list is telecom and entertainment company Comcast. Its shares are down 9% this year, but it has been an underwhelming buy for far longer than that. Over five years, it has declined by more than 20%.

The company's high debt load is clearly a concern for investors. The stock has been falling as interest rates have been on the rise. At around $100 billion in debt on its books, that's a figure that's simply too high to ignore. But Comcast is getting leaner and spinning off many cable assets into a new company, Versant. It will still continue to own the major NBC networks, its theme parks, Universal Studios, and its Peacock streaming service.

Like UPS, by getting smaller in size, Comcast can work on improving efficiency and focusing on its best growth opportunities. It will take some time to win investors over, but I think Comcast is going in the right direction. It trades at a forward P/E of just 7, and it offers a solid dividend that yields 3.9%.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends United Parcel Service and Vertex Pharmaceuticals. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.