Somewhere in the back of my memory bank lies an old quotation that I can’t exactly remember—and that I can’t find with Dr. Google’s help, either. But in light of the world’s situation today, I thought it appropriate to share its message. It goes something like this.
“Once the world’s attention is truly focused on solving a problem, it will be solved.” Today, the world’s attention is clearly focused on solving the coronavirus problem, and thus I have no doubt that it will be solved.
In the meantime, there are stocks to write about, and my favorites, as always, are stocks hitting new highs. Today, with the fight against coronavirus uppermost in the minds of investors, here are three “coronavirus stocks,” i.e. medical stocks of companies leading the race for a solution, as well as one more strong healthcare stock.
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Coronavirus Stock #1: Gilead Sciences (GILD)
Gilead is one of a handful of companies developing coronavirus treatments. The company researches, develops and commercializes mainly antiviral drugs for treating HIV, hepatitis B and C and the flu, but it’s the firm’s experimental drug Remdesivir that has attracted some adventurous buyers. It was recently reported that the nation of Georgia is in talks with Gilead to receive the trial medicine, which has been used since 2015 against Ebola and which has also been used in China to treat COVID-19; the company has offered it on a compassionate use basis in many other areas, too. Gilead isn’t hanging its hat on this drug alone, though, as the firm has plenty in its pipeline, and its HIV-related drugs consistently generate billions in revenues (Q4 2019 global HIV sales were up 13% year over year) and huge profits. Plus, the firm is a major player in cutting-edge CAR-T cell cancer treatment therapies. While the true potential of Remdesivir won’t be known for a while, any positive news from early-stage trials should help, and the stock’s low valuation (12 times earnings) and solid dividend (3.5% yield) are plusses that should keep big investors interested.
Coronavirus Stock #2: Moderna (MRNA)
Moderna has developed a potential RNA-based vaccine for coronavirus. RNA can be found across the cell, unlike DNA, which resides in the nucleus, so mRNA (messenger RNA, which transfers the information from DNA to the cell machinery that makes proteins) is more readily accessible to scientists. On February 24, the company reported that it had shipped the first batch of mRNA-1273 to the National Institute of Allergy and Infectious Diseases (NIAID), a division of the National Institutes of Health for a Phase 1 clinical trial in the U.S. The trial is being conducted at Kaiser Permanente in Seattle, and the first dose was actually given March 16. Although Moderna anticipates it will take at least a year to have top-line data results, the company is now also preparing for a Phase 2 trial of the vaccine and focusing on improving production capacity so that it can produce “millions of doses” if (when?) the vaccine is proven safe and effective. Of course, it’s a speculative stock, but Moderna’s upside is giant if its formulation proves to be a silver bullet.
Coronavirus Stock #3: Quidel (QDEL)
Quidel offers a number of rapid point-of-care tests for detection and diagnosis of many critical diseases and conditions, including influenza, respiratory syncytial virus, Strep A, herpes, pregnancy, thyroid disease and fecal occult blood, among others. With point-of-care testing, hospitals, urgent care centers and emergency rooms can see the test results within minutes instead of sending them out to a laboratory and that is boosting this firm’s prospects during the current pandemic. The FDA just approved Emergency Use Authorization for Quidel’s Lyra® SARS-CoV-2 Assay—which detects nucleic acid—to include three additional thermocyclers (machines that amplify segments of DNA). As well, the authorization adds to the specimens from which testing can be done, now including nasal and nasal turbinate swabs. Historically, growth hasn’t been fantastic here, but Quidel’s revenue growth has been picking up steam, Q4 results easily trounced estimates and there’s no question demand for its new devices should be strong in the months ahead.
One More Healthcare Stock: Vertex Pharmaceuticals (VRTX)
Vertex is the market leader in treatments for cystic fibrosis (CF), with a handful of products (Kalydeco, Orkambi, Symdeko) that are each targeted to a specific sub-portion of CF patients. But the real excitement here came in October when its triple-combination treatment (dubbed Trifafta) was approved in both the U.S. and Europe. This not only expanded the market (potential to treat up to 90% of all CF patients worldwide) but came with a higher-than-expected price tag, too. And the results of that showed up right away; Q4 results trounced expectations, management significantly boosted 2020 guidance and most analysts see the firm’s bottom line nearly doubling from 2019 to 2021 ($10.17 earnings estimates for 2021).
All four of these growth stocks were originally recommended in Cabot Top Ten Trader, which every week unveils 10 of the market’s strongest momentum stocks. To get the next issue (released every Monday), click here.
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