Buying stocks during periods of underperformance can feel uncomfortable, but long-term investors know the real question is where a stock will be years from now.
Stocks trading at discounted prices with strong underlying fundamentals often represent the best opportunities for patient investors willing to hold through uncertainty.
Three stocks that currently fit that description are Netflix (NASDAQ: NFLX), Pfizer (NYSE: PFE), and Verizon Communications (NYSE: VZ), all trading below $100.
Netflix has not been as compelling an investment this year, with the market concerned about potential acquisitions and co-founder Reed Hastings recently leaving the company.
Trading at around $74 and at 24 times its trailing earnings, Netflix carries an attractive valuation given the underlying strength of its business operations.
The company generated revenue totaling $45 billion last year, representing an increase of 34% from where it stood just two years ago.
Netflix also posted earnings of $11 billion last year, meaning roughly 24 cents of every dollar in revenue flows through to the bottom line.
That combination of strong growth and healthy profit margins makes Netflix a compelling long-term buy even amid near-term uncertainty surrounding the company.
Pfizer has been stuck in a prolonged slump, with shares trading around $24 despite a forward price-to-earnings multiple of just eight based on analyst estimates.
That $24 price tag is the same level at which investors could have purchased Pfizer stock back in 2012, illustrating just how flat the stock has been for over a decade.
The company currently offers a dividend yield of 7.1%, and it has around 20 key pivotal studies starting this year that could provide meaningful positive catalysts.
Pfizer remains a top name in healthcare with a demonstrated history of innovation, and any good news related to one of its drugs could set off a significant stock rally.
With Pfizer still expecting to generate solid and stable numbers this year, the stock carries less risk than its depressed valuation might suggest to casual observers.
Verizon Communications is another high-yielding, underappreciated stock, currently trading at around $42 with a forward price-to-earnings multiple of roughly eight.
The telecom giant pays a dividend yield of approximately 6.7%, making it one of the more income-friendly options available to investors in the current market environment.
Verizon has reported more than $130 billion in revenue in each of the past three years, reflecting the remarkable stability that defines its business model.
The company recently completed its acquisition of Frontier, a deal that is expected to drive growth and improve its overall revenue trajectory going forward.
As a leader in the telecom industry, Verizon is unlikely to see its competitive position erode anytime soon, reinforcing its appeal as a reliable long-term portfolio holding.
All three stocks offer different reasons to buy, but each combines a discounted valuation with strong fundamentals that could reward patient, long-term investors handsomely.
