Are These Top 3 Pharmaceutical Stocks On Your October Watchlist?
Investing in pharmaceutical stocks is a popular trend in times of political or economic instability. This is because the demand for drugs will still be steady all year long, no matter what is happening in the world. The pharmaceutical industry is part of the broader healthcare sector. Not only does it create opportunities for long-term investors, but it also provides quality of life advancement for patients. Unlike other sectors, the pharmaceutical industry generally is on the higher highs and higher lows trend. It is very unusual to see any top pharmaceutical stocks on the downtrend in the long-run. That’s because most drugmakers generate lots of cash from their drug sales. They continually reinvest in new ventures to drive future growth. They are also generous in rewarding shareholders with high dividend yields. Along with these opportunities, though, come significant risks.
Certainly, the COVID-19 pandemic has drawn even more attention to the space. This is especially true for companies developing vaccines and drugs for the novel coronavirus. The prospect of developing a COVID-19 vaccine treatment certainly has definitely brought the potential of the pharmaceutical industry to the investing community. However, many that aren’t involved in COVID-19 related work (or those that aim not to profit from the vaccine) have also seen impressive results so far in 2020. Of course, finding an affordable safe harbor at the same time as everyone else is easier said than done. This is especially true when the market appears to be close to all-time highs.
Why Invest In Pharmaceutical Stocks?
Despite a reputation of being high risk, pharma stocks can be compelling for long term investors. Since its 2006 inception, the SPDR S&P Pharmaceuticals ETF (XPH Stock Report), an exchange-traded fund that focuses on the pharmaceutical industry, has delivered a significantly higher total return than the S&P 500 index. But determining which are the top pharmaceutical stocks to buy can be tricky. So how should investors evaluate opportunities in an industry dependent on outcomes as unpredictable as drug approvals?
The pharmaceutical sector continues to create major headlines, with potential treatments and vaccines for COVID-19. Yet, many pharmaceutical companies continue to move higher on developments unrelated to the novel coronavirus. That said, are these 3 pharmaceutical stocks on your watchlist this month?
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Top Pharmaceutical Stocks To Buy [Or Sell] Right Now: Corcept Therapeutics Inc.
With a market cap of just slightly above $2 billion, Corcept Therapeutics (CORT Stock Report) is one of the smaller pharmaceutical stocks on this list. CORT stock is up more than 44% year to date and up over 70% since the coronavirus market crash in March. One reason for such bullish momentum is its earnings. Corcept is probably one of the small-cap biotech stocks that is profitable, and its year-over-year quarterly revenues are growing at 22.6%. It’s considered a small-cap because its valuation is between $300 million and $2 billion. And the benefit of investing in small-cap stocks is the opportunity to beat institutional investors through growth opportunities.
Corcept is a leader in the field of cortisol dysregulation. In fact, it is the only company solely devoted to developing drugs to modulate the hormone cortisol. The condition is important in a variety of diseases. They range from endocrine system disorders and oncology to ophthalmology and psychiatry. Since its inception in 1988, Corcept has established itself as a leader in researching and developing selective glucocorticoid receptor antagonists.
At the moment, Corcept only has one drug, Korlym for Cushing syndrome (a disorder that causes too much cortisol to be present in the bloodstream). The company also has a well-stocked pipeline with drug candidates at several stages of clinical trials that aims to treat canonically difficult disease areas. It’s fair to say that the cortisol therapeutics will pay off eventually, with its wide range of applications. With all that in mind, CORT stock remains a top pharmaceutical stock to watch for the long term.
Top Pharmaceutical Stocks To Buy [Or Sell] Right Now: Johnson & Johnson
Next up, Johnson & Johnson (JNJ Stock Report) is one of the best pharmaceutical stocks to buy in the market. Just yesterday, the FDA approved J&J’s Simponi Aria for patients with active polyarticular juvenile idiopathic and active psoriatic arthritis. The drug was first approved in the U.S. for rheumatoid arthritis. Of course, gaining additional approvals for the same drug is good news. It means the company can generate more sales without the trouble and expenses of developing a whole new drug from the ground up.
The company also 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 has been moving higher. 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.
Though better known for its consumer health products, Johnson & Johnson generated half its sales from its pharmaceuticals segment. In addition, nearly one-third of its sales came from medical device sales last year. Not long ago, the company made a massive acquisition to acquire Momenta Pharmaceuticals (MNTA Stock Report) in a huge $6.5 billion all-cash deal to take a huge leap in immunology. With JNJ stock climbing 5% for the past month, where do you think JNJ stock would be by the end of this year?
Top Pharmaceutical Stocks To Buy [Or Sell] Right Now: Pfizer Inc.
Pfizer (PFE Stock Report) has been getting a lot of attention in recent months. This is thanks to its potential coronavirus vaccine from the partnership with BioNTech (BNTX Stock Report), on top of its massive pipeline of drugs.
The partnership revealed that their leading coronavirus vaccine candidate, BNT162b2, is on track to be first to find out if its COVID-19 vaccine works by the end of October. And the anticipation of the news is certainly keeping PFE stock investors at the edges of their seats. The partnership appears to be the first among the contenders in the vaccine race.
If the vaccine wins the approval of regulators, Pfizer and BioNTech have said that they could supply up to 100 million doses by the end of this year. That’s enough to vaccinate 50 million people. In the following year, the duo could supply another 1.3 billion doses of the vaccine. Should all go well as planned, PFE stock would receive another boost in its stock price. On the flip side, in the event where the vaccine fails to produce strong data, it probably wouldn’t result in the free-falling of PFE stock. With this in mind, would you buy PFE stock today?