5 Best Cheap Stocks to Buy Now

2. Merck & Co. Inc. (NYSE:MRK)

Forward P/E Ratio: 11.57

Number of Hedge Fund Holders: 79

Merck & Co. Inc. (NYSE:MRK) is a healthcare giant with substantial earnings power.

For its fiscal 2022 second quarter results, Merck & Co. Inc. (NYSE:MRK) reported revenue of $14.59 billion, beating estimates by $731.76 million. The company also had adjusted earnings per share of $1.87, exceeding estimates by $0.16.

Longer term, analysts expect the company to grow earnings per share over the next 5 years by 11.07%.

If Merck & Co. Inc. (NYSE:MRK) can achieve those earnings growth estimates or even exceed them, the stock could be considered attractive given the forward P/E ratio of 11.57.

Many hedge funds are bullish on the stock. At the end of the second quarter of 2022, 79 hedge funds were bullish on Merck & Co. Inc. (NYSE:MRK) and held stakes worth $6.11 billion.

Here is what Sound Shore Management, an investment management firm, has to say about Merck & Co., Inc. (NYSE:MRK) in their Q2 2022 investor letter:

On the positive side, a number of our health care names outperformed, including drug maker Merck & Co. (NYSE:MRK). Benefitting from a best-in-class research and development team, Merck’s progress is being fueled by the impressive growth of its immune-oncology cancer drug, Keytruda. The stock remains attractive at less than 12 times 2023 earnings.