Do you have $1,000? 2 stocks that could be good buys for 2022 and beyond

As 2022 draws to a close, it’s safe to say that Wall Street will not remember this year fondly. Economic issues such as inflation, a lingering pandemic, and geopolitical tensions are some of the factors contributing to the poor performance of the market as a whole this year. No one can predict when stocks will rally, but when they do, it will pay to have some skin in the game.

Buying undervalued stocks today could help investors beat the market for the next five years and beyond. Let’s look at two biotech stocks that look attractive at current levels: AbbVie (ABVV -0.16%) and Gilead Sciences (BROWN -0.49%).

ABBV data by YCharts.

1. AbbVie

AbbVie is one of the largest pharmaceutical companies in the world. It has a strong drug portfolio that includes Humira, a blockbuster rheumatoid arthritis drug that was the world’s top-selling non-coronavirus pharmaceutical until last year.

Like other drugmakers, AbbVie benefits from the fact that doctors don’t stop prescribing life-saving drugs even in tough economic times, and patients don’t stop taking them. The company’s financial results have remained afloat despite the market-wide headwinds we have witnessed over the past nine months.

In the second quarter, AbbVie’s revenue rose 4.5% year-over-year to $14.6 billion. The company’s earnings per share were $0.51, up 21.4% from the same period a year earlier. Among these products paving the way for AbbVie are Skyrizi and Rinvoq, the two immunological drugs set to replace Humira.

With a patent cliff in the United States fast approaching – generic competition for Humira is set to begin in the country next year – AbbVie’s new drugs will have to pick up the slack.

During the second quarter, Rinvoq’s sales increased 56.3% year-over-year to $592 million. Skyrizi’s revenue was $1.3 billion, up 85.9% from a year ago. Humira’s sales were $5.4 billion, a 5.8% year-over-year increase. Skyrizi and Rinvoq are still aiming for label expansion, and both have a long streak of growth ahead.

According to CEO Rick Gonzalez, AbbVie will have achieved “some level of stability on the tail of Humira” by the end of 2024. The company’s revenues could suffer when generics first enter the market, but they will recover thanks to its line of immunology and other products, including its Botox franchise.

AbbVie has fared much better than the overall market this year. However, the healthcare giant remains reasonably valued. AbbVie’s forward price-to-earnings (P/E) ratio is 10.4, compared to a pharmaceutical industry average of 12.5.

AbbVie is also an excellent dividend stock. The drugmaker is currently offering a yield of 3.92%, along with a strong cash payout ratio of 43.5%. As the king of dividends, AbbVie will continue to reward shareholders with increased payouts. This is just one more reason why this stock is attractive, that is, on top of its reasonable valuation and strong long-term outlook.

2. Gilead Sciences

Gilead Sciences has not performed as well as AbbVie recently. Over the past two years, the company has faced regulatory hurdles that have prevented it from launching key products, and it has faced generic competition for some of its HIV drugs. The biotech was able to maintain revenue growth, albeit slightly, thanks to its COVID-19 therapy Veklury.

However, the coronavirus landscape beyond this year is uncertain. Fortunately, Gilead Sciences is not dead in the water. It is the leader in the HIV market, with strong market shares for some of its products. For example, Biktarvy’s share of the US HIV treatment market jumped 4% year-over-year to 44% in the second quarter.

It remains the leading HIV drug in the country by a mile, as well as the fastest growing. It’s also worth noting that the pandemic has led to lower prescriptions and patient debuts in the HIV market, and as things pick up, Gilead Sciences’ products in this space will also perform better.

Moreover, the company is not done innovating in the field of HIV and elsewhere. In August, the company obtained marketing authorization from Sunlenca in Europe. Sunlenca is an anti-HIV treatment given only twice a year — the first of its kind. Regulators in the United States initially refused to approve this product due to manufacturing issues.

But Gilead Sciences resubmitted an application after discussions with regulatory agencies, and it seems fairly likely to get the green light in the country. Gilead Sciences has dozens more programs in the works, and these will help it strengthen its lineup over the years. Biotechnology is currently trading for an attractive PER of 9.8.

Additionally, Gilead Sciences offers a dividend yield of 4.45% and a cash payout ratio of 38.9%, making it an excellent choice for income-oriented investors. Despite recent issues, Gilead Sciences is a solid stock to buy and hold through this year and beyond.

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