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3 Dirt Cheap Stocks You'll Regret Not Buying Before the New Year

Motley Fool - Mon Dec 4, 2023

Markets have rallied since the start of the year, climbing from last year's bear market low, and the three major indexes have even extended gains in recent weeks. This is great news, but it may make you wonder about the valuations of certain stocks -- and hesitate to buy. But here's more good news: There still are plenty of great deals out there, including among stocks that have rallied in recent times.

So, expand your holiday shopping and offer yourself a gift too. Add some of these stocks to your portfolio now, before they take off. Where to start? With three dirt cheap stocks -- leaders in their industries -- that you'll regret not buying before the new year.

The year 2024 is written in a dark sky with gold fireworks.

Image source: Getty Images.

1. Carnival

Carnival (NYSE: CCL)(NYSE: CUK) shares have climbed 95% this year, but they're still trading way below their pre-pandemic levels. At the same time, the world's biggest cruise operator has increased revenue, even reaching records, and has transformed itself into a more efficient business -- favoring long-term profitability.

Things weren't easy for Carnival at the start of the health crisis since it was forced to halt sailings -- and debt ballooned so the company could stay afloat. But Carnival has been managing its recovery well, with efforts such as cutting down on fuel costs and maximizing opportunities for guests to spend more on board ship. Meanwhile, demand for cruising has returned in a big way, even amid the tough economic context -- this is a positive sign for demand and revenue moving forward.

Carnival's latest earnings reports offer us reason to be optimistic. In the most recent quarter, Carnival reported record revenue and total customer deposits reached a third-quarter record. As for debt, the company has paid down about $4 billion this year -- focusing on variable rate borrowings, which makes Carnival less sensitive to potential interest rate hikes. And this is thanks to the company's growing adjusted free cash flow. The trend should continue, offering Carnival the tools to continue tackling the debt problem.

Today, Carnival shares are trading near historical low levels -- at about 1x sales -- making now the perfect time to buy.

2. Moderna

Moderna(NASDAQ: MRNA) stock is heading for a 55% annual loss as investors shied away from this coronavirus vaccine giant. Their concern? Declining vaccine demand. We've already seen its impact on Moderna, with product sales falling 44% in the most recent quarter.

But here's why you shouldn't worry, and instead, add Moderna stock to your portfolio. It's important to take a long-term view, and here, things look extremely bright. Moderna aims to launch 15 new products over the coming five years. While this sounds pretty ambitious, what's encouraging is that even if Moderna only makes it part of the way to this goal, the company still could deliver impressive revenue.

And if Moderna does reach its goal, the company forecasts revenue of as much as $30 billion a few years following the launches.

Why should we be optimistic about Moderna launching so many products? The company already has brought many candidates into late-stage development, meaning it's passed certain key safety and efficacy hurdles. Regulators should decide on its closest-to-market candidate -- a respiratory syncytial virus (RSV) vaccine -- early next year.

Finally, though coronavirus vaccine demand has declined, the product still could continue to deliver billion-dollar revenue as part of the population goes for annual vaccination. Recurrent revenue is something to cheer about, and another reason to like this biotech stock.

3. Apple

Apple(NASDAQ: AAPL) is such an enormous presence in our world that when we think of the word "apple" we probably think of the iPhone before we think of the piece of fruit. And this leads me to the first reason why you should consider this company: its moat, or competitive advantage.

In the case of Apple, the moat is the company's brand. Apple fans are known for sticking with their favorite products. This is great because, first, it offers us visibility on future revenue, and second, it offers Apple pricing power. This means Apple can raise prices without worrying about losing sales.

On top of this, Apple continues to add new customers, with about half of Mac and iPad buyers being new to the products in the most recent quarter. So, Apple not only has a solid loyal base of customers, but it's also continuing to grow its audience. That's the perfect combination.

I also like the fact that these customers are resulting in recurring revenue for Apple thanks to the wide variety of services the company offers to subscribers. I'm talking about everything from digital content to payment services. We're seeing that this revenue stream is growing significantly, with services revenue reaching a record in the most recent quarter.

Meanwhile, Apple shares trade for about 29 times forward earnings estimates -- a cheap price to pay for Apple's longtime market strength and future prospects.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Carnival Corp. and Moderna. The Motley Fool has a disclosure policy.

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