The old idiom "blink, and you'll miss it" might be the best descriptor of the historic volatility we've witnessed on Wall Street over the trailing week, as of this writing on April 9.
The two trading days that closed out the previous week (April 3 and April 4) were some of the roughest on record for optimists. The benchmark S&P 500lost 10.5% of its value in two days, which is its fifth-biggest two-day downdraft in 75 years! As for the Dow Jones Industrial Average, it neared a 4,600-point pullback spanning four sessions (April 3 through April 8).
On Wednesday, April 9, President Donald Trump temporarily reversed course on his tariff policies that were roiling the stock market and lowered tariffs to a flat 10% for most countries over the next 90 days (China not included). April 9 marked the largest single-session point increases for the Dow Jones Industrial Average (2,963 points), S&P 500 (474 points), and Nasdaq Composite (1,857 points), in their respective histories.
Image source: Getty Images.
Although the stock market remains historically pricey, based on the S&P 500's Shiller price-to-earnings (P/E) Ratio, some price dislocations have emerged amid the tumult on Wall Street. While I'm still sitting on quite a bit of cash in anticipation of the broader market becoming more fundamentally attractive, the historic volatility we've navigated our way through over the previous week allowed me to purchase six stocks with very clear price dislocations.
1. Pfizer
The first sensational stock I scooped up that appears to be mispriced by Wall Street is pharmaceutical goliathPfizer(NYSE: PFE). Though there's concern about the possibility of tariffs being put into place on pharmaceuticals, this looks to be an overblown worry for a historically cheap company that was nearing a sustainable 8% dividend yield earlier this week.
Pfizer has been getting a bad rap on Wall Street because its two core COVID-19 therapies -- its Comirnaty vaccine and Paxlovid oral therapy for patients who have the virus -- saw sales plunge from a peak of more than $56 billion in 2022 to roughly $11 billion last year.
But keep in mind that Pfizer wasn't generating any COVID-19 drug sales when this decade began and brought in $11 billion last year. In a four-year stretch (2020-2024), Pfizer's net sales jumped 52% to $63.6 billion. It's unquestionably become a stronger company, but hasn't been rewarded for it.
There's a good likelihood Pfizer's acquisition of cancer-drug developer Seagen will begin to pay benefits this year, as well. With acquisition-related expenses in the rearview mirror, Seagen's pipeline, and the cost-savings associated with this merger, should become apparent in Pfizer's bottom line and long-term growth forecast.
A forward P/E ratio of just above 7 is nothing short of a steal for Pfizer stock.
2. Sirius XM Holdings
Satellite-radio operator, and Warren Buffett favorite, Sirius XM Holdings(NASDAQ: SIRI) is another stock with an apparent price dislocation that I've been gladly purchasing. Despite near-term worry about a U.S. recession, which would likely hurt auto sales and slow/stall Sirius XM's self-pay subscriber growth, the company's well-defined competitive advantages tell the long-term story.
The obvious edge for Sirius XM is that it's the only licensed satellite-radio operator. I don't want to give the impression that it's devoid of competition for listeners, but being the only satellite-radio company does afford it a level of pricing power that most radio operators can't match.
But even more important than its status as a legal monopoly is its revenue diversity. Whereas traditional radio companies rely almost exclusively on advertising to keep the lights on, Sirius XM brought in just 20% of its net sales from ads last year. The bulk (76%) of its net sales are the result of recurring subscriptions. If the U.S. economy weakens, Sirius XM's operating cash flow tends to be more predictable than companies reliant on advertising revenue.
The valuation is also too enticing to ignore, which likely what keeps bringing Buffett back for more. Earlier this week, shares of Sirius XM could be had for a multiple of 6 times forward earnings, which is its lowest forward P/E since going public in 1994. To boot, patient investors will receive a 5.2% annual yield.
There's not much I love more than a time-tested stock with a track record of success that Wall Street absolutely despises. Though I'm not oblivious to the challenges that lie ahead for semiconductor stock Intel(NASDAQ: INTC), its shares trading well below book value, and near tangible book value earlier this week, represented the perfect entry point.
For all the concern about Advanced Micro Devices eating Intel's legacy central processing unit (CPU) share for lunch, Intel is still the dominant player when it comes to CPUs used in laptops and desktops. CPUs may not be the growth story they were two decades ago, but they can still generate ample operating cash flow for Intel.
There's also the recent hire of Lip-Bu Tan as the company's new CEO. Tan, who held the CEO position at Cadence Design Systems for 12 years (2009-2021), has more than two decades of semiconductor industry and software experience. Importantly, he's not afraid to simplify Intel's operations by selling off non-core assets. When coupled with ongoing cost-cutting, Intel should exhibit improved margins beginning this year.
Lastly, keep in mind that every next-big-thing innovation for over three decades has endured a bubble-bursting event. Despite Intel's struggles in bringing artificial intelligence (AI) chips to market during the current period of euphoria, it'll likely get another chance when AI expectations reset in the future. In other words, Intel can still be a leader in AI, despite its tardiness.
Image source: Getty Images.
4. Fastly
The fourth beaten-down stock with an apparent price dislocation that I bought during Wall Street's historic volatility is cloud edge platform Fastly(NYSE: FSLY). Even though Fastly's growth rate in recent quarters has been a bit disappointing, the company's long-term outlook and valuation continue to be compelling.
Fastly is best-known for its content delivery network (CDN), and for its security solutions, to a lesser degree. Effectively, it expedites getting information from the edge of the cloud in a secure manner to end users. With businesses moving their data, and that of their customers, online and into the cloud at an accelerated pace following the COVID-19 pandemic, it's created a scenario where Fastly should enjoy steady growth for many years to come.
While a net retention rate of 102% over the last twelve months leaves a lot to be desired (this means existing customers increased their spending by 2% year-over-year), Fastly's enterprise customer count is climbing and its annual revenue retention rate has consistently been 99% or a tad higher. Clients are sticking with the company, which, along with mindful spending, should improve operating cash flow in 2025 and beyond.
Admittedly, Fastly is a long-term story that isn't going to turn around overnight. But with shares trading below book value and at 1.2 times forecast sales for the current year (as of April 8) -- many cloud stocks are valued at a multiple of 5 to 10 times sales -- Fastly was a bargain I couldn't pass up.
5. BioMarin Pharmaceutical
Earlier this week, I also pulled the trigger on shares of specialty biotech company BioMarin Pharmaceutical(NASDAQ: BMRN). In spite of some concern about potential competition for its top-selling achondroplasia drug Voxzogo, the company's consistent growth, pipeline, and valuation are giving an all-systems-go signal.
One of the keys to BioMarin's success is that it focuses on orphan-disease therapies. This is a fancy way of saying it develops novel drugs to treat conditions that affect relatively small groups of patients. The advantage of being a specialty-drug developer is that competition is minimal or nonexistent, which tends to lead to highly predictable demand and strong pricing power.
For the moment, the aforementioned Voxzogo is BioMarin's core growth driver. Last year, the company raked in $2.85 billion in sales, representing an 18% year-over-year increase. Voxzogo accounted for around a quarter of net sales, with the company's enzyme therapy portfolio collectively adding $1.93 billion in net sales (up 12% from the prior year).
The second-half of 2025 should be an exciting time, with some of the company's most-promising pipeline candidates and existing therapies with label expansion opportunities unveiling clinical results.
BioMarin ended April 8 at just over 10 times forecast earnings for 2026 and roughly 3.4 times consensus sales for 2025. Both figures represent historic lows for the company.
6. PubMatic
Last but certainly not least is the company I've purchased shares of most-aggressively during the tumult on Wall Street, adtech up-and-comer PubMatic(NASDAQ: PUBM). Though PubMatic is in a similar position to Sirius XM in that it would struggle during a recession, the risk-versus-reward profile overwhelmingly favors "reward" at this point.
To state the obvious, economic expansions last significantly longer than contractions. Whereas the average recession since the end of World War II has stuck around for about 10 months, the typical period of growth endures for five years. This is a simple numbers game that strongly favors ad-driven businesses.
What makes PubMatic enticing is its focus on digital advertising. Operating as a sell-side platform that helps publishers sell their digital display space puts it at the center of the rapidly growing digital ad market for connected TV (CTV), video, and mobile. CTV is the company's fastest-growing segment and accounted for 20% of net sales during the December-ended quarter.
But PubMatic's biggest advantage might be its internally developed cloud infrastructure platform. Choosing to develop its own cloud infrastructure will ensure it keeps more its revenue as it scales. In other words, it'll generate superior margins as it grows.
Finally, PubMatic closed out 2024 with $2.90 per share in cash and no debt, and has generated positive operating cash flow for 10 years. Based on its $7.77 per share close on April 8, it was valued at 10 times forecast earnings per share (EPS) in 2026. If you back out the company's cash, we're talking more than like 6 times forecast EPS with long-term double-digit growth potential. PubMatic's price dislocation is as clear-cut as they come.
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Sean Williams has positions in BioMarin Pharmaceutical, Fastly, Intel, Pfizer, PubMatic, and Sirius XM. The Motley Fool has positions in and recommends Advanced Micro Devices, Cadence Design Systems, Fastly, Intel, Pfizer, and PubMatic. The Motley Fool recommends BioMarin Pharmaceutical and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
