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Forbes
5 days ago
- Business
- Forbes
Should You Buy MRK Stock At $80?
INDIA - 2025/05/20: In this photo illustration, a MERCK logo is seen displayed on a smartphone and ... More in the background. (Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images) Merck (NYSE:MRK) stock has experienced a significant 22% decline this year, sharply underperforming the broader S&P 500 index, which is down only 1%. This downturn can be attributed to several factors: a lowered guidance for 2025 and growing concerns about the long-term growth prospects of its blockbuster drugs, Keytruda and Gardasil. Specifically, weak sales of Gardasil in China, a critical market for the vaccine, have unsettled investors. Furthermore, Keytruda is nearing the end of its market exclusivity period in 2028, raising questions about future revenue. Despite these near-term concerns, we believe the negatives might already be priced into Merck's stock. While challenges exist, the company's current valuation appears very low. We've reached this conclusion by analyzing Merck's current valuation against its recent operating performance and its historical and current financial health. Our assessment of Merck across key parameters—Growth, Profitability, Financial Stability, and Downturn Resilience—indicates that the company possesses strong operating performance and financial condition. However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative - having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Going by what you pay per dollar of sales or profit, MRK stock looks cheap compared to the broader market. Merck's Revenues have grown marginally over recent years. Merck's profit margins are much higher than most companies in the Trefis coverage universe. Merck's balance sheet looks fine. MRK stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on MRK stock? Our dashboard How Low Can Merck Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes. In summary, Merck's performance across the parameters detailed above are as follows: • Growth: Neutral • Profitability: Very Strong • Financial Stability: Neutral • Downturn Resilience: Strong • Overall: Strong Considering Merck's very low valuation and its strong performance across key financial and operational parameters, we believe MRK stock is an attractive buy. However, it's crucial for investors to acknowledge the inherent risks. As seen during the 2008 financial crisis, MRK stock plummeted over 65% from its peak, demonstrating its susceptibility to significant downturns. Current concerns also include the potential for continued declines in Gardasil sales and a slowdown in Keytruda's sales growth as it approaches patent expiry. Should these scenarios materialize, MRK stock could experience further declines. While we view Merck's current valuation as compelling, investors should thoroughly weigh these risks against the potential upside. While MRK stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
Forbes
17-04-2025
- Business
- Forbes
Microsoft Stock At $370: Opportunity Or Trap?
WEST BENGAL, INDIA - 2024/12/11: In this photo illustration, a Microsoft Azure logo is seen ... More displayed on a smartphone with a Microsoft logo in the background. (Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images) The current period presents concerns for broader markets, which inevitably create challenges for Microsoft (NASDAQ:MSFT). Growing economic anxieties in the United States, fueled by the implementation of tariffs and an escalating trade war, are fostering a generally unfavorable market climate. While Microsoft's stock has not been immune, declining from nearly $450 in January to around $370, its drop has been less severe than some other tech stocks. This relative resilience can be attributed to Microsoft's limited exposure to China (reportedly low-single-digits contribution to sales) and its focus on the software and cloud side of its business, offering some insulation from global trade tensions. Separately see – ASML Stock To $400? The question now is whether to buy MSFT stock at $370. We think so. Our positive outlook is based on a comprehensive analysis comparing Microsoft's current valuation against its recent operating performance, as well as its present and historical financial standing. This assessment, which considers key parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience, reveals that Microsoft possesses a very strong operating performance and a robust financial condition, as will be detailed further. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative - having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Going by what you pay per dollar of sales or profit, MSFT stock looks expensive compared to the broader market. Microsoft's Revenues have seen notable growth over recent years. Microsoft's profit margins are considerably higher than most companies in the Trefis coverage universe. Microsoft's balance sheet looks very strong. MSFT stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on MSFT stock? Our dashboard How Low Can Microsoft Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes. In summary, Microsoft's performance across the parameters detailed above are as follows: Given Microsoft's very strong performance across key parameters, the stock presents an attractive investment opportunity. While its valuation may appear high when compared to the broader market, Microsoft's current trailing price-to-earnings (P/E) ratio of 30x is actually lower than its three-year average of 33x. Coupled with the continued robust growth expected from its cloud offerings, Microsoft appears to be a compelling buying opportunity for long-term investors at the current levels. Although near-term volatility related to ongoing tariffs does pose a risk, for investors with a time horizon of 3 to 5 years, we believe MSFT is a sound stock to buy. Not too happy about the volatile nature of MSFT stock? The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Invest with Trefis Market Beating Portfolios | Rules-Based Wealth
Forbes
10-04-2025
- Business
- Forbes
Why META Stock Is The Play, Not Google
INDIA - 2025/03/18: In this photo illustration, a Meta logo is seen displayed on a smartphone with a ... More Google logo in the background. (Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images) Question: Why choose to invest in Meta stock (NASDAQ: META) at 25 times earnings when Google stock (NASDAQ: GOOG) is available at a lower multiple of 20? You might still want to, especially when you consider these key points: Some might consider Meta a 'safe haven,' but its past market behavior suggests otherwise. For example, META stock dropped more than 75% during the 2022 inflation shock, and fell by around 35% during the uncertainty of 2020. So, it's not exactly a safe stock. Our dashboard How Low Can Stocks Go During A Market Crash shows how key stocks have performed during and after the last six market crashes. META's stock price experienced a significant pullback, declining from nearly $740 in February to approximately $505 earlier this week. Subsequently, following President Trump's announcement of a 90-day pause on reciprocal tariffs, the stock rallied to its current price of $585. For investors looking for a potentially more resilient and better-performing option, consider the Trefis High Quality portfolio. This strategy has delivered more than 75% returns since inception, as shown by its HQ performance metrics. If you're confident in the long-term potential of AI, Meta Platforms offers a compelling opportunity. Unlike companies that only build AI, Meta also implements it across billions of users. This gives Meta a unique edge in monetizing AI advances through advertising, content suggestions, and improved user experiences. With substantial investments in AI R&D and the largest social media user base globally, Meta is well-positioned to benefit from AI growth—no matter which specific technologies win out. Despite its advantages, investing in Meta involves risk. One concern is that Meta's earnings could fall short, or its growth could decline from 20% to around 15% soon. This slowdown may stem from the broader economy, where businesses are likely to cut ad spending to conserve cash. Additionally, unknown or unexpected shocks could negatively impact the stock. As a result, investors should be ready for possible steep declines—up to 40%. Selling during such downturns could hurt long-term returns. Still, for those with a 3-5 year time horizon who can handle volatility, Meta's current price levels might present a good entry point into AI. If you're interested in strategies to weather downturns and even benefit from them, you might look into the Trefis Reinforced Value Portfolio, which has outperformed its all-cap benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 indices), or speak with a financial advisor experienced in bear markets. Staying calm and strategic during market swings is often key to building substantial wealth. Invest with Trefis Market Beating Portfolios | Rules-Based Wealth
