Overlooked Stocks with Attractive Discounted Rates at Present Values
In the ever-evolving world of business, two giants - Alphabet (GOOG, GOOGL) and Merck (MRK) - continue to stand tall, offering promising investment opportunities despite recent market turbulence.
## Alphabet (GOOG, GOOGL)
Alphabet, the parent company of Google, is leading the charge in artificial intelligence (AI) technology, a sector brimming with growth potential. Its AI ecosystem, a testament to its commitment to innovation, is a significant competitive advantage, attracting enterprise customers and driving innovation [1][2].
Alphabet's diverse product offerings, including YouTube and Google Cloud, contribute to a robust business model. Google Cloud, in particular, is expanding its services, providing essential solutions like cybersecurity and analytics, which are increasingly in demand [2].
The stock market's recent pullback has left Alphabet's shares at around $178.60, offering a potential buying opportunity for long-term investors seeking growth [1][2]. Despite potential regulatory issues, such as an antitrust lawsuit in the U.S., Alphabet's deep profitability allows it to navigate around such challenges [3].
Alphabet's financial resilience is evident in its consistent revenue growth and strong financial foundation, making it a stable investment option even in volatile markets [2]. The company generated $74.9 billion in free cash flow over the trailing-12-month period, accounting for about 31% of its revenue in 2024 [4]. Moreover, its cloud computing and YouTube businesses ended 2024 with a combined annual run rate of $110 billion, indicating significant growth opportunities in cloud computing, artificial intelligence, and streaming [6].
## Merck (MRK)
Merck, a pharmaceutical powerhouse, boasts a robust portfolio of medicines, including oncology and vaccines, ensuring long-term growth [5]. Its cancer treatments and vaccines continue to drive revenue, while its substantial investment in research and development ensures a pipeline of future products, maintaining its competitive edge in the pharmaceutical industry [4].
Merck's strong market position and brand recognition provide a solid foundation for long-term investment. Despite current market dynamics, the company remains a well-established player in the sector.
In addition to its product portfolio, Merck offers a stable dividend yield, attracting income-seeking investors in uncertain market conditions. Merck has increased its payouts by 88.8% and currently offers a forward yield of 4.1% [7].
Recently, Merck has been looking for its next oncology star to mitigate the threat from new entrants, particularly Summit Therapeutics' ivonescimab. While ivonescimab is expected to take time to earn enough indications to match Keytruda's, Merck has over 80 programs in phase 2 or phase 3 studies, which should translate to plenty of brand-new approvals or label expansions in the coming years [8].
In the oncology market, LM-299, a bispecific antibody developed by Merck in partnership with China-based LaNova Medicines, is gaining attention due to its rapid growth [9]. This partnership underscores Merck's commitment to innovation and its ability to navigate the complexities of the global pharmaceutical market.
In conclusion, despite recent market challenges, both Alphabet and Merck present compelling investment opportunities. Alphabet's leadership in AI and diverse revenue streams, combined with its undervalued stock, make it an attractive choice for growth-oriented investors. Merck's robust product portfolio, R&D efforts, and stable dividend yield continue to attract investors seeking long-term growth and income.
- The stock market's pullback has left Alphabet's shares, with a potential buying opportunity for investors seeking growth, as its AI technology and diverse product offerings are promising investment opportunities in the ever-evolving world of business.
- Merck's strong market position and brand recognition, combined with its robust portfolio of medicines, including oncology and vaccines, make it a solid foundation for long-term investment, offering a stable dividend yield to income-seeking investors in uncertain market conditions.
- Investing in technology sector giants like Alphabet and Merck, such as by purchasing their stocks or exploring opportunities in their associated industries like AI and cloud computing, could prove beneficial for investors looking to capitalize on the growth potential in these sectors.
