Coronavirus Stocks Could Soar Due to COVID-19 Vaccine
It seems simple: if you’re able to cure a global pandemic, it would only make sense that you’d be rewarded financially (not to mention have literally millions of people thanking you for getting us out of the nightmare).
As you’d expect, the race for a COVID-19 vaccine and/or COVID-19 treatment is heating up, with several pharma stocks having taken the lead in the search. Nevertheless, I’d classify only one of them as my top coronavirus stock: Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Regeneron may have a silly name, but this company is at the forefront of finding a COVID-19 treatment, which in turn could lead to massive gains from REGN stock.
This is one of those win-win situations: not only can investors make significant profits from this pharma stock, but they also get the bonus of potentially helping fund a COVID-19 treatment or COVID-19 vaccine that, in turn, could save hundreds of thousands of lives (not to mention help bring the economy back online).
It’s safe to say there’s a lot riding on a COVID-19 vaccine or COVID-19 treatment. And with stakes this high, you can bet that there will be many different companies vying to be the progenitor of the medication.
But, at the moment (and this is subject to change), Regeneron stock is the top coronavirus stock for a couple main reasons.
The first is that news broke regarding the company’s progress in finding a COVID-19 treatment.
Regeneron has entered late-stage clinical trials to assess the effectiveness of its antibody cocktail in preventing and treating the virus. The research, run jointly with the National Institute of Allergy and Infectious Diseases (NIAID), involves testing the treatment’s ability to prevent infection in those who have had close exposure to a COVID-19 patient. (Source: “Regeneron Begins COVID-19 Antibody Cocktail Late-Stage Trial, Shares Rise,” Reuters, July 6, 2020.)
“REGN-COV2,” an experimental therapy, has also entered into the mid-to-late-stage phase of two trials testing its effectiveness in hospitalized and non-hospitalized COVID-19 patients. (Source: Ibid.)
What that tells us is that Regeneron Pharmaceuticals Inc has, for now, taken the lead in the race for a vaccine, treatment, or cure.
Again, that could change.
And any of you who have followed pharma stocks in the past know that the market is anything but stable. Trials can get very far before ending in total disappointment, often to the detriment of investors’ portfolios. So there is volatility and risk in this sector. But the reward, well, that speaks for itself.
The first company to find a treatment or vaccine would see huge flows of capital into its coffers as it became a worldwide sensation overnight. Which would, in turn, help swell the REGN stock price.
It’s a risk vs. reward situation for sure, but there’s reason to be confident in Regeneron stock.
Check out the chart below:
Chart courtesy of StockCharts.com
This chart compares three of the leading pharmaceutical stocks that are currently in the running for the coronavirus stock sweepstakes. Notice something? The outlier, the one that’s way above the other two, is REGN stock.
What this means is that the market is showing confidence in Regeneron Pharmaceuticals Inc. That’s a good sign.
A second thing to note about Regeneron stock is that it has doubled in value over the past 12 months.
Chart courtesy of StockCharts.com
That means market momentum had already been building behind REGN stock before it became a “coronavirus stock” (or before most people had even heard the word “coronavirus”).
All this combines to make Regeneron stock a top coronavirus stock as the company searches for a COVID-19 treatment.
So I’m quite bullish on REGN stock, but there is one major obstacle to all coronavirus stocks.
Coronavirus Stock Backlash
Here’s my major concern with all the coronavirus stocks, including Regeneron stock: the hype. There is a lot of interest in finding a COVID-19 cure (as you’d expect), and that desire creates a frothy market with many eager to get in on the ground floor of the company most likely to create a vaccine.
The problem is that this eager money could be pretty easily misled. Which is to say, a major breakthrough could be prematurely announced and send markets into a frenzy, only for it all to quickly be reversed.
That hype could also damage the long-term viability of these stocks. In the rush to find the COVID-19 vaccine, we may see a treatment get greenlit only to find out that it has unintended side effects.
Now, these scenarios aren’t necessarily likely. They’re not even unique to coronavirus stocks. But they are more likely, compared to other pharma stocks. Therefore, investors ought to be totally aware of all possible eventualities before making major investment decisions.
Having said all that, I believe that REGN stock, and coronavirus stocks more broadly, represent some of the best possible picks on the market right now.
With everyone talking about coronavirus right now, it only stands to reason that a company looking to directly deal with the global pandemic would be ideally situated to profit from the current market climate.
With pharma stocks aiming to develop a COVID-19 treatment or COVID-19 vaccine, we have several very strong companies that could end up making investors exponential profits as we close out 2020.
That potential is arguably unmatched by any other industry at the moment. We’re talking potentially hundreds of percentage points of stock price gains in a matter of days if the virus continues to rage around the world.
But with that possibility comes a fair bit of risk. Risk, mind you, that isn’t altogether worse than the remainder of the pharma industry, but risk all the same. Still, coronavirus stocks like Regeneron Pharmaceuticals Inc could end up making investors a ton of money if played right.