Do You Have These Top Medical Stocks On Your Watchlist?
Medical stocks have had an exciting year so far. With medical companies pushing out innovation after innovation, they have withstood the trials of 2020. Despite the raging COVID-19 pandemic, these stocks have generally performed well. The S&P 500 Healthcare Sector Index, which covers a portfolio of large-cap medical stocks, has risen by 41.8% since March. How has the medical industry managed to pull off a feat like that in a mere 7 months?
The answer is that we are living in an age of medical marvel. From pocket-size ultrasound devices to artificial intelligence that can spot lung tumors better than medical experts. Technology like this would only have been science fiction 50 years ago. Today, we are living longer and healthier lives, more so than at any point in human history. With new treatments and medicine being unveiled every other day, top medical stocks are leading the recovery of the stock market.
Medical stocks like Medtronic (MDT Stock Report) and Johnson & Johnson (JNJ Stock Report) have all made staggering gains since March, at 43.2% and 32% respectively. This comes as a surprise given how other industries are struggling to regain momentum. With the medical industry thriving and experiencing growth in this COVID-19 era, here are 3 medical stocks that could help diversify your portfolio.
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Medical Stocks To Buy [Or Sell]: Novavax Inc.
Novavax Inc. (NVAX Stock Report) is at the forefront of creating the COVID-19 vaccine. By starting its phase 3 trials in September, the company is now in the spotlight for all the right reasons. The NVAX stock has since been recovering from its high of $180 in August. This could now be a good opportunity for investors to ride on the vaccine race. The vaccine development company has had an impressive 2,348% increase in its share price year-to-date so far.
Although its vaccine candidate, NVX-CoV2373, is trailing behind some of its biggest competitors like Moderna (MRNA Stock Report), it could prove to be the best. The reason being that Novavax’s vaccine uses a tried and tested recombinant protein method. The Hepatitis B vaccine was created through this method and is now administered worldwide. This makes the company’s vaccine candidate a safe bet as compared to unproven methods by its competitors.
Novavax has also signed an agreement with Serum Institute, the world’s largest producer of vaccines to produce 1 billion doses of vaccines. If this comes to fruition, it could be a goldmine for Novavax and its shareholders. Novavax is also currently seeking FDA approval for its flu vaccine, NanoFlu. The company believes that its flu vaccine could be a game-changer because it is able to provoke a stronger antibody response for the seasonal flu. With that in mind, could NVAX stocks present an opportunity for investors to make huge gains?
Medical Stocks To Buy [Or Sell]: Abbott Laboratories
One of the great giants in the medical industry, Abbott Laboratories (ABT Stock Report) has had a lucrative year so far. The healthcare company boasts a huge portfolio of medical products, ranging from vascular care to diagnostics. In combating COVID-19, Abbott has released six different COVID-19 tests so far. The high demand for quick and effective testing has driven the sales revenue from its diagnostics department to grow by 7% in the second quarter.
The company is a worldwide leader in COVID-19 diagnostics and has the numbers to boast. Its molecular diagnostics segment grew by 241% in the second quarter as sales of over 40 million coronavirus tests worldwide were deployed. This has led to sales of $2 billion in the second quarter, making it Abbott’s second-largest segment. As the company is unlikely to sustain this kind of revenue in the long term, it has taken proactive steps to gain an even larger share in the coronavirus testing market. Abbott plans to offer discounts and develop new testing products to help tackle to COVID-19 problem.
The healthcare company has been aggressively pushing quicker and cheaper diagnostics kits. In August, the FDA had granted emergency use authorization for Abbott’s BinaxNOW rapid coronavirus diagnostic test. With a price tag of $5, a 15-minute processing time, and an integrated smartphone application, BinaxNOW is a significant improvement over the diagnostic tests from its competitors. This could drive Abbott’s revenue even higher than its current impressive figures. As Abbott’s Q3 2020 earnings are approaching on October 21, could this be a perfect opportunity for investors to buy ABT stocks?
Medical Stocks To Buy [Or Sell]: Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX Stock Report) has also seen increased revenue in recent years. The company has consistently increased its revenue for the last 6 years. VRTX stock has enjoyed an upswing of 20.7% year-to-date as sales soared. A substantial amount of its sales come from its profitable cystic fibrosis (CF) drug, Trikafta.
Trikafta was introduced in October last year and is now the company’s biggest seller. In Vertex’s second-quarter fiscal, the drug gave the company a revenue of $918 million. In addition to Trifkafta sales, its overall Q2 product revenue was $1.52 billion, up by 61% year-over-year. The company is projecting an adoption rate of 90% globally by all CF patients. It also expects nearly $6 billion in revenue this year. With the recent cooling of VRTX stock from an all-time high in September, should investors buy the dip?
Vertex also has other drugs in the pipelines, albeit still in early trials. Its VX-150 is a pain medication that targets neuropathic and musculoskeletal pain. The company is collaborating with CRISPR Therapeutics on a gene-editing therapy to treat inherited blood diseases. If it is successful, the therapy will be able to cure sickle cell disease and transfusion-dependent beta-thalassemia. Ultimately, with Vertex detailing its plans for the next 5 years, the company has positioned itself to benefit from expected annual growth of 24.4% in the CF market through 2027. With its moat within this niche, is VRTX a safe bet for the long term?