3 Bargain Stocks to Buy in a Market That's Priced for Perfection

How richly valued are stocks right now? Legendary investor Warren Buffett has built Berkshire Hathaway's cash stockpile up to roughly $277 billion. When Buffett is sitting on that much cash because he can't find appealing investments to buy, you know stocks are expensive.

There are exceptions, though. In a market that's broadly speaking priced for perfection, three Motley Fool contributors have identified what they think are bargain stocks to buy: Axsome Therapeutics (NASDAQ: AXSM), CRISPR Therapeutics (NASDAQ: CRSP), and Pfizer (NYSE: PFE).

Prosper Junior Bakiny (Axsome Therapeutics): Few things can jolt biotechs, especially relatively small ones, like solid clinical and regulatory wins. Axsome Therapeutics, a drugmaker with a market cap of about $4.3 billion, could experience quite a few of those in the next two years. It has already made tremendous progress since the start of the decade, going from a clinical-stage biotech to one with two approved products on the market. But it isn't done yet.

Within the next 12 months, AXS-07, a potential therapy for migraines, and AXS-14, an investigational treatment for fibromyalgia, could both earn regulatory approval. The company will also release results from multiple clinical trials in the coming months. Positive results could lift Axsome Therapeutics' share price.

Is the biotech a bargain stock? In my view, the answer is yes. While Axsome Therapeutics generates little revenue and is still unprofitable -- which isn't unusual for biotechs of this size -- its late-stage pipeline is incredibly promising. Before long, it should have a lineup with four to six products that will generate growing sales for years.

Axsome Therapeutics' valuation continues to lag the potential of its pipeline. Sure, it could experience clinical and regulatory setbacks -- indeed, it has already faced some. However, there is a good chance that it will generate strong returns in the next five years, partly because its likely successes aren't baked into its valuation. That's why I'd advise investors to buy the stock today.

David Jagielski (CRISPR Therapeutics): Although it may seem like just about every growth stock is trading at a significant premium these days, there are some bargain-basement options available. One is gene-editing company CRISPR Therapeutics. It is down 24% this year, but optimism should be higher than ever for the business as it is on the cusp of some exciting growth opportunities.