3 Absurdly Cheap Coronavirus Stocks To Buy Now
Companies contributing to the fight against COVID-19 have received a lot of attention over the past year, but not all of their inventories have soared. For some companies, the pandemic offers an opportunity to launch their first commercial product, and the shares of some of them have exploded.
But for companies that already had substantial revenues before the crisis hit, the additional activities of the pandemic were less transformational and investors did not show as much love for their stocks. The market appears to be discounting any revenue from COVID-19 related products and services as a one-time deal, destined to disappear once the pandemic is over.
Investors could overlook some major opportunities. Below are three stocks of profitable and growing companies that would be long-term buys even without coronavirus-related activities. And the market is also underestimating the value of this new venture.
At the top of my list of coronavirus bargains is Regeneron Pharmaceuticals (NASDAQ: REGN). The company specializes in antibody-based medicines, which it develops to fight a wide range of inflammatory, ophthalmological, cardiovascular and infectious diseases, as well as cancer. He developed REGN-COV2, the cocktail of antibodies used to treat President Trump.
Regeneron’s activity is growth to 30% clip even without REGN-COV2. The company’s diabetic eye disease drug had sales of $ 7.9 billion in 2020, but most of the near-term growth will come from the inflammation drug Dupixent, which increased sales by 75 % last year to reach a total of $ 4.0 billion. The company’s pipeline is also loaded. It has eight ongoing Phase 3 clinical trials, 12 in Phase 2 and 15 in Phase 1. The U.S. Food and Drug Administration is expected to issue a decision on Evkeeza, a drug to treat a rare metabolic disease, on February 11.
But even though REGN-COV2 has become more valuable in recent weeks, the share price remained stagnant. Operation Warp Speed ordered 300 million doses of the antibody cocktail last year. In January, he agreed to purchase an additional 1.25 billion doses. It’s a deal worth $ 2.625 billion in the first half of 2021. Not bad, considering the company only had $ 8.5 billion in revenue all last year.
Regeneron shares have been up a modest 40% from a year ago and are selling 20 times 2020 earnings, which had a minimal contribution of REGN-COV2. The stock is a boon at 13 times analysts’ estimates for 2021 earnings, down from a forward multiple of 22 for the S&P 500.
Emerging BioSolutions (NYSE: EBS) specializes in drugs, vaccines and medical devices to counter threats to public health. Its business of selling chemical and biological warfare countermeasures to the US government has been growing and profitable for years. It also sells the Narcan nasal spray, which first responders use to treat opioid overdoses.
But the most promising near-term growth driver for Emerging turns out to be a new contract manufacturing and development services (CDMO) company. The company sells a service to help pharmaceutical companies manufacture products, which turned out to be the place to be when the world suddenly needed to manufacture billions of doses of the COVID-19 vaccine. The CDMO segment only accounted for 7% of 2019 revenue at $ 80 million, but Emergent estimates it will bring in between $ 925 million and $ 965 million in 2021, or 47% of revenue. The company has contracts for the manufacture of vaccines with the government, Johnson & johnson, AstraZeneca, and Novavax.
Emerging’s strong cash generation enabled it to increase its revenue at a compound annual growth rate of 33% between 2016 and 2020, through acquisitions and investments in research and development. The company is targeting 29% revenue growth in 2021, and analysts are forecasting a 27% increase in earnings per share. The stock is selling 13 times the consensus estimate for BPA 2021.
Ironically, the best deal among coronavirus stocks is perhaps the one that has received the most press attention in recent months. Pfizer (NYSE: PFE), with his German partner BioNTech hit the market early with its COVID-19 mRNA vaccine, BNT162b2, but investors have yet to give it any credit for the huge venture that will result.
Pfizer plans to sell $ 15 billion of BNT162b2 in 2021, earning more than $ 4 billion in adjusted revenue from the vaccine. Considering the company made adjusted revenue of $ 12.5 billion on revenue of $ 42 billion in 2020, that’s a huge boost to bottom lines. The company does not believe this is a one-time bargain either. The emergence of variants likely means that updated vaccines will be needed for years to come. Pfizer charges a “pandemic price” of $ 19.50 per dose for BNT162b2, but has hinted that it could increase the price in the coming years to something closer to its normal vaccine price of $ 150 to $ 175.
Despite the heaps of money the vaccine will produce, Pfizer’s shares are selling for about what they did when the pandemic started. But the growth prospects for the rest of the business have also improved in the meantime. She split off her low-growing Upjohn business to form Viatris, leaving him with a strong growth portfolio in the fields of oncology and rare diseases, as well as important pipeline assets in the fields of inflammation, metabolic diseases, cancer and vaccines. Pfizer expects Adjusted EPS to increase 15% in 2021 excluding BNT162b2, and 42% including it.
Pfizer shares would be a steal even without the coronavirus vaccine, selling 14 times the company’s estimate of what the rest of the company will earn in 2021. But those vaccine profits are real money , and investors can buy it high quality pharmaceutical stock to 11 times the forecast for 2021 Total Adjusted EPS, and collect a 4.5% dividend while waiting for the market to recognize the stock’s value.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.