The S&P 500 ETF (NYSEARCA:SPY) has not performed well in 2022. It is down 22.4% so far this year, including dividends. But the market is made up of individual stocks, and not all stocks have done so poorly. In fact, a few have even managed to generate positive returns in this difficult environment. One such stock is my pick for InvestorPlace’s Best Stocks for 2022 — Bristol-Myers Squibb (NYSE:BMY) stock. The company has generated total returns (including dividends) of 15.1% this year as of this writing. This is 37.5 percentage points ahead of the S&P 500 ETF.

Why I Picked BMY Stock

Bristol-Myers Squibb’s low valuation at the end of 2021 stood out. BMY stock appeared significantly undervalued. Here’s what I said about the company at the end of 2021:

“We expect adjusted earnings-per-share of $7.48 for the year. This gives the company a price-to-earnings ratio of just 7.9 using expected fiscal 2021 adjusted earnings-per-share…

…We believe a conservative fair value price-to-earnings ratio for Bristol-Myers Squibb is 13.5. This is by no means a high price-to-earnings ratio … The S&P 500’s price-to-earnings ratio is 29.4 for comparison. It’s worth noting that Bristol-Myers Squibb traded above a price-to-earnings ratio of 13.5 for much of the last decade, prior to 2020.

If the company returned to a price-to-earnings ratio of 13.5 from its current price-to-earnings ratio of just 7.9, investors would realize gains of around 70%.”

Valuation multiple expansion is responsible for the bulk of gains in 2022 for Bristol-Myers Squibb stock. The company’s valuation multiple has expanded from 7.9 at the end of 2021 to 9.2 now, using our current expected fiscal 2022 earnings per share (EPS) estimate of $7.59.

While Bristol-Myers Squibb’s price-earnings (P/E) ratio has increased significantly in 2022 so far, I believe there’s still plenty of room left for further valuation multiple expansion.

Of course, some of that does depend on what the market does. If the market continues its steep slide, I don’t expect a big move upward from Bristol-Myers Squibb’s stock. But, if the market recovers from its current position, BMY stock should go higher as well.

As mentioned above, the company is currently trading for a P/E ratio of 9.2. This is still a low ratio both historically for Bristol-Myers Squibb and compared to the S&P 500’s P/E ratio of 18.5.

Our fair P/E ratio estimate for Bristol-Myers Squibb hasn’t changed. Here’s what I said on the topic in my initial recommendation on InvestorPlace: “We believe a conservative fair value price-to-earnings ratio for Bristol-Myers Squibb is 13.5. This is by no means a high price-to-earnings ratio … It’s worth noting that Bristol-Myers Squibb traded above a price-to-earnings ratio of 13.5 for much of the last decade, prior to 2020.”

With a current P/E ratio of 9.2, and a target P/E ratio of 13.5, I believe that there is still 47% upside to Bristol-Myers Squibb at current prices. The stock still appears undervalued.

Best Stocks 2022: Why a Quality Dividend Stock Will Win

Outside of valuation, Bristol-Myers Squibb is still a high-quality dividend stock based on its 15 years of consecutive dividend increases and established position in the healthcare sector.

And Bristol-Myers Squibb stock still has an above-average dividend yield of 3.1%. This compares favorably to the S&P 500’s current dividend yield of 1.8%.

On top of the low valuation and solid dividend yield, Bristol-Myers Squibb also has modest, but positive, growth expectations ahead. The company is targeting 1.1% adjusted EPS growth this year based on the midpoint of guidance. This growth is coming off of excellent 16.6% adjusted EPS growth in fiscal 2021. From fiscal 2012 through fiscal 2021, the company generated phenomenal adjusted EPS growth of 23.1% annually.

I am expecting growth to slow relative to its pace over the last decade due to the company’s blockbuster pharmaceutical Revlimid beginning to lose its patent protection this year. Indeed, “patent cliff” fears are likely why investors can buy into shares of Bristol-Myers Squibb at such a discount right now.

But fear-influenced investors are missing the bigger picture at Bristol-Myers Squibb. The company’s management team expects low- to mid-single digit revenue growth from 2020 through 2025. The company is not expected to shrink, despite current fears.

Despite the runup in price being over for Bristol-Myers Squibb stock this year, I continue to believe the company is both undervalued and a buy for investors looking for value, safety and dividends.

On the date of publication, Ben Reynolds held a long position in BMY stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.