3 Drug Stocks to Buy at a Discount

Over short periods, Wall Street is largely driven by emotions. When there's a compelling story, such as the emergence of GLP-1 weight loss drugs in the pharmaceutical sector, investors tend to become overly excited.

Eli Lilly's (NYSE: LLY) industry-leading GLP-1 drugs have netted it a price-to-earnings ratio (P/E) of 53. Other well-respected drugmakers, meanwhile, have been left to languish. This is why contrarian investors should take a look at (NYSE: MRK), Bristol Myers Squibb (NYSE: BMY), and (NYSE: PFE) today.

Eli Lilly's 53 P/E ratio is huge. The stock price advance that led to that valuation has pushed the dividend yield down to a shockingly low 0.6%. The average P/E for the drug sector is roughly 30, with an average yield of around 1.3%. From a valuation perspective, it's pretty clear that investors are affording Eli Lilly a premium price.

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Source Fool.com