The rising market in 2023 has not lifted all boats. Some stocks look extremely cheap right now. This offers investors an opportunity to buy shares of great companies at distressed prices and ride them higher in coming months and years. While some stocks are down for good reason, many have been dragged lower by cyclical economic factors, sector trends, and poor investor sentiment that are beyond the company’s control.
This is the time investors should pounce and take advantage of stocks that are trading at low multiples. After all, the goal is still to buy low and sell high, right? Let’s explore the three best cheap stocks to buy in December.
AbbVie (ABBV)
Pharmaceutical giant AbbVie’s (NYSE:ABBV) stock looks cheap right now, having fallen 10% in 2023 and not far from its 52-week low.
The pharma company’s share price has been brought low by valid concerns. The first is that its top-selling arthritis medication, Humira, is losing its patent protection. Also, ABBV is subject to competition from cheaper generic alternatives. Humira has been one of the top-selling medications in the world for over a decade. AbbVie racked up $21 billion in sales during 2022 alone.
But AbbVie isn’t taking the patent expiration lying down. The company has been on a tear lately as it acquires new companies and the medications that come with them. Most recently, AbbVie announced that it is buying neuroscience drug maker Cerevel Therapeutics (NASDAQ:CERE) for $8.7 billion. That deal will give AbbVie access to Cerevel’s psychiatric and neurological disorder medications. Also, AbbVie announced that it is buying cancer drug maker ImmunoGen (NASDAQ:IMGN) for nearly $10 billion.
It likely won’t be long before AbbVie is back at the top of the pharmaceutical sales charts.
Dell Technologies (DELL)
Buy the pullback in Dell Technologies’ (NYSE:DELL) stock. Shares of the personal computer (PC) manufacturer have fallen 6% since it announced mixed third-quarter financial results.
The company reported earnings per share (EPS) of $1.88, which was well above the Wall Street consensus of $1.46 a share. However, Dell’s revenue totaled $22.30 billion, down 10% from a year ago and below the $23 billion that analysts had forecast.
Dell said that its revenues continue to be challenged by ongoing weakness in corporate PC demand. But, company executives say that they expect a rebound in corporate PC sales globally over the course of 2024. Additionally, Dell is expected to get a lift in the year ahead from artificial intelligence (AI). The company said that its backlog for AI-optimized servers doubled sequentially in the most recent quarter. In fact, Dell shipped over $500 million of AI-optimized severs during Q3.
Despite the post-earnings drawdown, DELL stock has risen 65% in 2023. Trading at 18 times future earnings estimates, the stock still looks affordable. Plus, it pays one of the best dividends of any tech security with a quarterly payout of 37 cents a share, giving it a yield of 2.19%. And finally, Dell bought back $744 million of its own stock in Q3.
Chevron (CVX)
Oil prices continue to slump with West Texas Intermediate (WTI) crude oil currently trading at $70 a barrel, down from more than $90 earlier this year.
The drop in crude prices has dragged the stock of U.S. oil major Chevron (NYSE:CVX) down with it. CVX stock has declined 18% in 2023 and hovering near a 52-week low. Trading at just 10 times future earnings estimates, Chevron’s stock looks cheap. Also, it pays a quarterly dividend that yields 4.21%.
Additionally, weighing on CVX stock right now and helping to pull it lower than other oil securities, is its proposed $53 billion acquisition of Hess Corp. (NYSE:HES). Chevron is offering $171 for each share of Hess. The deal is valued at $60 billion, including some Hess debt that Chevron has agreed to absorb. Analysts have raised doubts about whether the deal is necessary or not, and investors appear to be taking a wait-and-see approach. Regardless, there’s no doubt that CVX stock is cheap right now.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
