3 Bargain Stocks for Investors on a Budget

Key Points

• Pharmaceutical giant Pfizer has struggled as pandemic pressures eased, but there’s a light at the end of the tunnel.

• Uber Technologies is plugged into a sociocultural movement that’s only just begun.

• As AI continues to proliferate, cost is becoming an increasingly significant factor. One company stands ready to capitalize on this dynamic.

• 10 stocks we like better than Pfizer ›

Money is tight for most Americans these days. Although the math suggests wages have mostly kept up with inflation, the reality is that paying the rent or the mortgage, buying groceries, or just keeping the lights turned on has never felt so painful.

There's no wiggle room, either. As the Motley Fool's own in-house research arm points out, the typical U.S. household only has about $8,000 worth of accessible cash in the bank; for many families, that's just enough to cover about three months' worth of basic living expenses. Given this, it's no stretch to suggest that the typical American household has little -- if any -- money left over to grow into a nest egg. This means whatever amount of money that is able to be put to work in the market must be invested very, very cost-effectively, minimizing risk even if it means less-than-thrilling 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 »

To this end, here's a closer look at three bargain stocks anyone living on a budget might want to consider adding to their portfolio before buying any more expensive growth names.

Image source: Getty Images.

1. Pfizer

The past three years have been tough ones for Pfizer (NYSE: PFE) shareholders. Although the drugmaker's COVID-19 vaccine and treatment catapulted the stock during the coronavirus pandemic, once that business peaked, so did the stock. The company hasn't even come close to matching 2022's top line of $100 billion; analysts are only looking for revenue of $63 billion this year.

There's an arguable upside to the stock's 60% pullback from its late-2021 high, however. That is, the market was so fixated on the past -- and even the present -- that it overshot its target, ignoring a promising future that's finally coming into view.

See, Pfizer has been busy since the wind-down of COVID-19. Although it's got no revenue to show for it yet, it's got a bunch of things in its developmental pipeline that will result in revenue in the foreseeable future -- drugs like Elrexfio (elranatamab-bcmm) and Sigvotatug vedotin. Elrexfio is already approved as a treatment for some cases of multiple myeloma, but the phase 3 testing of the therapy that's underway right now could dramatically widen its marketability. Sigvotatug vedotin is an antibody-drug conjugate (ADC) garnered with Pfizer's 2023 acquisition of Seagen. The 2L lung cancer treatment candidate has shown tremendous promise through phase 3 trials. All told, Pfizer has 18 phase 3 oncology drugs in its pipeline right now, eight of which the company says could each be generating more than $1 billion in annual sales by 2030.

And that's just cancer. Pfizer has a total of 28 drugs in phase 3 trials right now, including a Lyme disease vaccine that's been fast-tracked by the FDA, as well as an orphan drug called osivelotor for the treatment of sickle cell disease that's also been fast-tracked.

The point is, the pharmaceutical company's got plenty of growth drivers ahead. Investors are just going to need to be a little more patient.

Of course, a stock priced at only about 8 times next year's expected per-share earnings certainly makes it easy to find that patience. The forward-looking dividend yield of 7.1% helps as well, particularly if your portfolio needs regular cash injections that you may not always be able to come up with from your work-based wages.

2. Uber Technologies

Currently trading at a little more than 30 times this year's projected per-share profit and 26 times next year's expected earnings, Uber Technologies' (NYSE: UBER) stock may not seem to be bargain-priced compared to the market's overall valuation.

Not every stock is meant to be compared to a marketwide average, though. Technology stocks in particular have a long history of steep valuations that don't seem to stand in the way of their forward progress. Names like Amazon and Microsoft come to mind, both of which are valued comparably to Uber's stock right now, despite both of them growing more slowly than Uber is at this time. Far more important to a tech stock's performance is the underlying company's story and long-term growth potential, and Uber Technologies has plenty to tout on these fronts.

You know the company. While it didn't invent ride-hailing, it did arguably usher the idea into the mainstream, becoming the dominant player in at least North America's piece of the global industry by capitalizing on a sweeping sociocultural shift. That's the growing disinterest in owning an automobile, or even attaining a driver's license. A recent survey performed by Deloitte indicates that while only 11% of the country's 55-and-up crowd would be willing to forego car ownership, 44% of the 18- to 34-year-olds surveyed would at least consider it, pointing to a generational divide that's underscored by other data. The U.S. Department of Transportation, for instance, reports that only about one-third of the nation's eligible teens currently hold a driver's license, down from roughly two-thirds of the same cohort thirty years ago. The sheer cost of car ownership, paired with the availability of options like Uber, is cited as the chief reason for this shift that isn't apt to slow down anytime soon.

Whatever the reason, as these younger adults grow up and have children of their own, they're going to further normalize this relatively new mobility option, sustaining Uber's current growth rate well into the distant future. The stock's apt to grow into its current valuation soon enough.

3. Qualcomm

Finally, add Qualcomm (NASDAQ: QCOM) to your list of bargain stocks to consider buying if you're on a budget and need to make sure you get the most risk-adjusted bang for your buck in your investment portfolio.

To date, most of artificial intelligence's (AI's) high-performance computing needs have been met by premium-priced computer processors, largely made by Nvidia. Qualcomm hasn't been much of a factor in the movement.

As time marches on and the technology improves, however, mobile devices are expected to handle AI duties onboard rather than punting this work to the cloud, and Qualcomm is moving toward the center of the stage. For instance, Qualcomm's AI-capable Snapdragon processor is well featured among Microsoft's business-class laptops, as well as in several higher-end AI-capable smartphones made by Samsung. Qualcomm's Snapdragon X was technically the first mobile processor capable of handling generative AI workloads, in fact, when it was first unveiled back in October of 2023. It just wouldn't matter much until a higher-profile outfit like iPhone maker Apple would begin convincing consumers that onboard artificial intelligence would make a mobile device worth owning. And even then, Apple's rollout of its AI solutions didn't exactly thrill consumers.

The ball is rolling, though, and now that it is, Straits Research expects the world's mobile AI market to expand at an annualized pace of nearly 29% per year through 2033. The affordable mobile AI processors that Qualcomm brings to the table position it to capture at least its fair share of this growth.

Bolstering its potential upside is the company's continued progress on the automotive front. Qualcomm and BMW recently unveiled a jointly developed automated driving assistance system built around the Snapdragon processor, which is readily available today to any manufacturer that wishes to license the technology.

Given all of this, it's surprising you can still buy Qualcomm's stock at a price of only 14 times this year's anticipated per-share earnings.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Nvidia, Pfizer, Qualcomm, and Uber Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.