We recently compiled a list of the 8 Best Bargain Stocks To Buy in October. In this article, we are going to take a look at where Biogen Inc. (NASDAQ:BIIB) stands against the other bargain stocks.
The Aftermath of an Easing Cycle
September has historically been sluggish for stocks. However, with an easing cycle and an upcoming election in store, the results this year may be untypical. On September 26, Tom Lee, Fundstrat Global Advisors managing partner and head of research, appeared in an interview on CNBC to discuss the market outlook ahead of the easing cycle.
Lee suggests that an easing cycle indefinitely improves the performance of markets, especially from a historical standpoint, hinting that with 40 days to the election, the market may change its course of action accordingly. While stocks reposition themselves positively after an easing cycle, the markets may see delays, especially because investors are more likely to wait until after the results are out.
Lee added that rallies in November and December will be significantly high, especially when markets have been up more than 10% in the first half of the fiscal year 2024. While the economy is not officially in a recession, the number of investors and analysts who believe the economy is going down is immense. Therefore, to get investors on the move evidence has to be better than expected.
What do the Elections Mean for Markets?
The 50 basis point cut may have redeemed positive results for the market. On September 28, Matt Powers, Powers Advisory Group managing partner, appeared in an interview on Yahoo Finance to discuss the plausible sectors to target as elections approach.
Powers shared that inflation numbers validated the 50 basis point cut, showing positive economic signs. However, he does reiterate that there will be some short-term volatility, especially in October.
According to him, investors must focus more on stocks in the defensive sectors, including utilities, consumer staples, and financials. Powers advises investors to spare some short-term equity but focus on long-term and medium-term results. Overall, he believes that the market is more balanced and a reallocation to the dividend stocks and dividend ETFs is highly probable.
Now that we have studied the aftermath of the easing cycle and the market outlook before an impending election, let’s take a look at the 8 best bargain stocks to buy in October according to analysts.
Our Methodology
To come up with the best bargain stocks in October, we used the Finviz screener to find stocks trading at a forward P/E of less than 20. We sorted our screen by market cap and went through the 30 biggest stocks. We then shortlisted the stocks that were the most popular among hedge funds, as of Q2 2024, and that analysts saw the most upside to. The stocks are ranked in ascending order of analysts’ upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A patient receiving physical therapy for a neurological disease.
Biogen Inc. (NASDAQ:BIIB)
Forward P/E as of September 28, 2024: 12.06
Analyst Upside Potential as of September 28, 2024: 41%
Number of Hedge Fund Holders: 46
Biogen Inc. (NASDAQ:BIIB) ranks fourth on our list of the best bargain stocks to buy according to analysts. The biotechnology company is based in Massachusetts, United States. The company was founded in 1978 and has pioneered a range of breakthrough medicines for Alzheimer’s and spinal muscular atrophy.
The company is actively working to expand its operations. Previously in July, the company completed the acquisition of Human Immunology Biosciences, a private biotechnology company for patients with immune-mediated diseases. During the second quarter, Biogen Inc. (NASDAQ:BIIB) also gained approvals from Hong Kong, the United Arab Emirates, Israel, and countries in Europe for its drugs.
The company is working towards improving its business. Eighteen months ago, Biogen reported declining revenues and profits for four years. However, since Q4 2023, the company has been working relentlessly to launch new drugs, reduce costs, invest more in research and development, grow externally, and optimize its existing portfolio.
Biogen Inc. (NASDAQ:BIIB) expects to gain approval from 20 countries by the end of this year, evidence of its efforts toward the growth of its company. Such explains why 46 hedge funds were bullish on the stock at the end of Q2 2024.
Patient Capital Management’s Patient Capital Opportunity Equity Strategy stated the following regarding Biogen Inc. (NASDAQ:BIIB) in its Q2 2024 investor letter:
“Biogen Inc. (NASDAQ:BIIB) is another name that we believe is underappreciated. As a global biopharmaceutical business, the company is most well known for their products in multiple sclerosis, spinal muscular atrophy, and most recently Alzheimer’s disease. The new CEO, Christopher Viehbacher, is working to improve the company’s pipeline, most recently with their acquisition of Human Immunology Biosciences Inc. in May. Chris has a strong track record of successful M&A and we expect him to continue that tradition. More importantly, we think the market is currently giving the company no credit for success in their Alzheimer’s indication. While the uptake in Leqembi, their Alzheimer’s product, has been slow, we still see strong long-term potential for a patient population that is dramatically underserved. We find the risk/reward extremely attractive.”
Overall BIIB ranks 4th among the 8 best bargain stocks to buy in October. While we acknowledge the potential of BIIB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BIIB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.