3 Top Biotech Stocks To Buy Or Sell In October?
With investors scrambling to pick up some of the best COVID-19 vaccine stocks amid a volatile market, there hasn’t been a better time to invest in biotech stocks. Not to mention that the coronavirus pandemic creates opportunities for biotechnology companies, investors are turning to top biotech stocks to buy that could potentially outperform the market. If you look at an industry-specific ETF, you would understand what I’m trying to say. Over the past year, the iShares NASDAQ Biotechnology ETF (IBB Stock Report) is up 34.7%, easily beating the S&P 500’s 13.94% return.
Sure enough, news that President Donald Trump and First Lady Melanie Trump tested positive for the novel coronavirus shook the markets on Friday. However, the President made an appearance last night outside the hospital. That could have been a sign that he has made great progress with Gilead’s (GILD Stock Report) remdesivir and Regeneron’s (REGN Stock Report) antibody cocktail. His appearance might just have brought great confidence to the global stock market today. Nevertheless, uncertainty is still the name of the game for the stock market this week.
President Trump Testing Positive May Not Be A Bad Thing For The Stock Market
With the election happening in less than one month, it is not surprising for investors to be cautious. After all, claims of mail-in voting fraud and actual reports of absentee ballot mishaps were contentious at best. They have put many investors on edge, fearing that it could lead to massive sell-off in the market. As Thomas Lee from Fundstrat Global Advisors puts it; Trump’s positive test is a “positive development” for coronavirus compliance in the U.S. and “good for markets.”. The president’s treatment and recovery would be a validation of the strength of U.S. therapeutics if Trump recovers quickly. And that will undoubtedly be good for the market.
“We cannot allow a lack of transparency to undermine confidence in the vaccine development process,” Michelle McMurry-Heath, the president and chief executive officer of the trade group BIO, wrote in a letter sent Thursday evening to Mr. Trump’s health secretary, Alex M. Azar II. “The public must have full faith in the scientific process and the rigor of FDA’s regulatory oversight if we are to end the pandemic.”
Looking for the best biotech stocks to buy involves different metrics of assessment, unlike the rest of the stock market. In many cases, biotech earnings reports aren’t the lightning rod for huge price swings. Instead, these biotech stocks typically tend to ebb and flow on clinical data releases, regulatory approval decisions, or government contracts, which are arguably far more important for gauging biotechnology firms’ developments. That said, having a list of top biotech stocks and closely watching their clinical dates and recent development will put investors in a better position to profit.
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Top Biotech Stocks To Buy [Or Sell]: Laboratory Corporation of America
As the coronavirus pandemic continues to rattle the market, companies that make COVID-19 tests have been pressured to meet immense demand. Laboratory Corporation of America (LH Stock Report), or LabCorp as it’s known, is one of the biggest diagnostic testing companies in the country. And of course, it has been in the headlines for coronavirus testing. And because of the massive demand, LH stock jumped nearly 50% over the past 6 months.
The company was the first U.S. commercial lab to launch testing for COVID-19 using the polymerase chain reaction (PCR) molecular test on March 5. You may have guessed it given the scale of the company. So, what’s the fuss about this company you ask? Over the weekend, LabCorp has received FDA green light for a new type of COVID-19 test. Why is that notable? That’s because this test requires fewer reagents. The company can avoid relying on the extraction reagents required to perform most RT-PCR tests—products that have fallen into short supply over the course of the pandemic.
Separately, LabCorp has received FDA Emergency Use Authorization for the use of “matrixed pooling” of samples collected using it’s at home COVID-19 test collection kits. This allows the company to test larger groups of samples at one time, dramatically speeding things up. That is a tremendous help to labs that could only process one test at a time. With all that being said, would LH stock be compelling enough to be on your watchlist?
Top Biotech Stocks To Buy [Or Sell]: Novavax
Of the vaccine candidates from the Operation Warp Speed (OWS), Novavax (NVAX Stock Report) falls in the middle of the spectrum. You may think of a company like Johnson & Johnson who is in traditional vaccine development. On the other end, you have companies like Moderna (MRNA Stock Report) with its messenger RNA (mRNA) candidate, which may be quite cutting edge. Novavax is somewhere between these two ends. As NVAX stock appears to be taking a breather recently, would it be a good time to invest now?
With biotech stocks, it’s crucial to look at the existing pipeline. Investors who bought in NVAX stocks are putting their hopes all very high. No doubt, they are hoping that the vaccine would eventually get the approval. But what if it doesn’t? The share has rallied more than 2,200% year to date. And this is absurd if it’s only been due to a vaccine candidate that doesn’t even exist yet.
So why all the excitement? For Novavax, it’s in large part due to the company’s NanoFlu vaccine candidate for seasonal influenza. And that could be very lucrative. But of course, the novel coronavirus came and distracted everyone. The company is currently pursuing FDA approval for this vaccine. Once approved, this new drug could generate sales of up to $1 billion. With these promising developments, the question is, has the upside already been priced in?
Top Biotech Stocks To Buy [Or Sell]: Johnson & Johsnon
Johnson & Johnson (JNJ Stock Report) began its pivotal Phase 3 trial in recent weeks. This came after Phase 1/2 trial data showed that a single dose of its COVID-19 vaccine induced a “strong” neutralizing antibody response in nearly all participants aged 18 years and older. Following this announcement, JNJ stock jumped. This is expected given the volatility of the biotech industry. The company expects its COVID-19 vaccine candidate, JNJ-78436735, to be available for emergency use by early next year.
This stock is also worth paying attention to for its attractive dividends. J&J pays out a lucrative quarterly dividend of $1.01, translating to a 2.73% yield. In April, the company declared a 6.3% increase in the quarterly dividend rate. This along with the CEO highlighting the company’s strong financial position sets the stage for J&J’s future.
The company has also signed a manufacturing deal for its vaccine candidate with Grand River Aseptic Manufacturing Inc. This is in line with J&J’s strategy to start the distribution of its vaccine upon FDA approval. Analysts have indicated a potential upside of 10.4% for this share as it begins its Phase 3 trial. As this company enters the final lap of the vaccine race, will you be putting your money on JNJ to bet on a successful vaccine?