While the current bull market has served many investors well, it has not necessarily been a rising tide for all boats. Some growth stocks are still seeing volatility and that has left short-term focused investors uneasy. Recent market volatility is attributable to a range of factors, including concerns about a slowdown in the U.S. economy as well as an interest rate hike instigated by the Bank of Japan.

Long-term investors tend to be less concerned about these short-term market movements, but they know that the whims of the market over weeks or months alone shouldn’t dictate their underlying investment philosophy. Instead, they try to focus on quality businesses that they want to own a piece of for the long term, adding to their positions in these companies through market changes as long as their investment thesis holds.

These investors look at market drops as investment opportunities for growth-oriented companies trading on sale, and it just so happens that two names are trading at a discount that these long-term investors might want to take a closer look at.

1. Pfizer

Pfizer (NYSE: PFE) shares are trading down about 21% from their 52-week highs, largely on the market’s disappointment over a drop in sales related to Pfizer’s COVID-19 vaccine sales waning. The drop was inevitable as pandemic concerns eased and the company’s growth has returned to normal levels. But Pfizer remains a strong company, which means there is an opportunity for forward-thinking investors.

Pfizer is still one of the top healthcare companies in the world, with a portfolio of medicines including market-leading oncology drugs, vaccines, immunology drugs, and more. The company’s $43 billion acquisition of cancer drugmaker Seagen alone — one of a streak of acquisitions Pfizer entered into fueled by cash from its COVID-19 products — is expected to help add eight new blockbuster drugs to the company’s portfolio by 2030.

Pfizer has accumulated more drug approvals from the U.S. Food and Drug Administration than any other pharmaceutical company in the past year. While growth did decelerate significantly from the height of the pandemic, the company is profitable and revenue is growing again.

In the second quarter of 2024, Pfizer reported revenue of just over $13 billion, up 3% on an operational basis. However, if you take out the impact of its COVID-19 products, that figure was up 14% from the same quarter in 2023. Heavy hitters in its portfolio like its transthyretin amyloidosis cardiomyopathy (ATTR) medicine Vyndaqel/Vyndamax/Vynmac and migraine medication Nurtec both grew revenue by double-digit percentages in the quarter: 71% and 44%, respectively.

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Although down from the same six-month stretch in 2023, profits in the first half of 2024 totaled about $3.1 billion. Pfizer has spent the last few years investing heavily in its future growth through a series of acquisitions and internal business development, but it still had about $7 billion in cash on hand at last count.

Pfizer still pays its dividend faithfully. The company’s forward annual dividend rate is approximately $1.68 per share, while the stock’s lagging performance has driven the yield to an eye-popping 5.8%.

Pfizer is in a period of transition, but the market appears to be shortsighted for thinking this company has exhausted its growth opportunity. The ship will eventually right itself thanks to a solid foundation of cash, market-leading products, and a burgeoning pipeline of blockbusters. All are green flags for Pfizer’s future over the next decade and beyond.

2. PayPal

PayPal (NASDAQ: PYPL) stock is up approximately 16% over the past 12 months ago but still remains down about 77% from its all-time high. PayPal has had a bumpy few years after the heights it hit during the pandemic’s peak. However, the company remains a market leader in payment processing technologies and still accounts for 45% of all online payments processed globally.

Net revenue jumped 8% year over year in the second quarter to $7.9 billion, while operating income soared 17% to $1.3 billion. Total payment volume in the quarter came to just shy of $417 billion, an 11% increase from the same quarter in 2023. Payment transactions per active account on PayPal are also steadily rising, up 11% in the past year despite active accounts being down slightly.

PayPal reported operating cash flow of $1.5 billion in the quarter, with free cash flow of $1.4 billion. It also had over $18 billion in cash and investments on its balance sheet at last count, more than enough to cover its debt load of $12 billion.

From individual payment processing to commercial use cases, PayPal retains a strong foothold in the payments industry that is only bolstered by the continued growth of the multitrillion-dollar e-commerce space. While pandemic-level growth may not be realistic to expect anymore, PayPal is expanding revenue at a healthy clip, increasing its cash flows, and remaining profitable.

Now could be a time to buy the stock while it’s trading down considerably from its pandemic highs.

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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal and Pfizer. The Motley Fool recommends the following options: short September 2024 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.

2 Incredibly Cheap Growth Stocks to Buy Now was originally published by The Motley Fool