Stocks to Buy if Covid Gets Worse - Financhill

Stocks to Buy if Covid Gets Worse

The 2020 novel coronavirus pandemic is an unprecedented global event with nearly 30 million cases reported for the year by early Fall. That includes over 6.5 million cases in the United States resulting in nearly 200,000 deaths.

Widespread panic shopping and municipal lockdowns pushed the unemployment rate to historic highs over 10 percent for months, according to the U.S. Department of Labor’s Bureau of Labor Statistics.

While we worked to flatten the curve, the fall and winter are traditionally the times when flu season hits in the U.S..

In fact, Dr. Anthony Fauci of the Centers for Disease Control and Prevention warned this could provide the perfect environment for the virus to return with another wave soon. This leads investors to wonder which stocks to buy if COVID-19 gets worse. Here are five top contenders based on the first outbreak.

Moderna Has A Customer For 100 Million Doses

Moderna (NASDAQ:MRNA) has one of the leading coronavirus vaccines currently undergoing phase 3 clinical trials in mRNA-1273. This solution uses RNA inhibitors attached to the virus’s spike proteins to hypothetically help the body’s immune response to a SARS-CoV-2 viral infection.

It has been enrolling patients since late August 2020, and the company is committed to ensuring participants cover all ethnicities. Preliminary reports over the summer seem positive, but final results to prove efficacy won’t be available until early next year.

Still, MRNA stock has been trading between $60 and $100 throughout 2020, which is a long way from the $20 range it traded at for the past two years prior. One reason for the pop is the company has received as much as $1.525 billion in funding from Operation Warp Speed (OWS), the U.S. government’s coronavirus funding program.

In return, Moderna already has a buyer in the government for 100 million doses of the vaccine. The government can also exercise the right to purchase another 400 million doses, should it prove viable.

This assumes the company hits all its deadlines, although it’ll still receive a large portion of the funding by year end. Although this revenue is mostly built into the stock’s current market cap, it covers a large portion of the company’s research and development.

The government is essentially shouldering the company’s losses in order to speed up the approval process and get a vaccine on the market.

These moves put Moderna in a great position to continue fighting both SARS and MERS versions of the coronavirus. It also helps that OWS is led by former Moderna board member Moncef Slaoui, who divested his stake in the company but still faces criticism of favoritism toward the company.

Should it succeed, you can bet it’ll continue profiting off those 500 million doses, along with whatever it sells outside the U.S.

Could Pfizer Make A 5x Return?

Moderna isn’t the only company working on a coronavirus vaccine. Pfizer (NASDAQ:PFE) is partnered with German biotechnology company BioNTech SE (NASDAQ:BNTX) on a vaccine candidate called BNT162B2.

It’s also a part of OWS and is receiving $1.95 billion to ensure delivery of the first 100 million doses. The government also has the ability to purchase another 500 million doses if the product receives Emergency Use Authorization (EUA) or FDA licensure.

Pfizer CEO Albert Bourla promised his pharmaceutical company will have results to prove whether the treatment is effective by the end of October 2020.

Of course, the coronavirus vaccine is only one product segment Pfizer is serving. It has a wide range of drugs already approved the FDA to treat widely experienced problems caused by working and schooling from home, like Xanax, Zoloft, Viagra, and Lipitor.

This wider exposure helped Pfizer continue paying its quarterly cash dividend of $0.38 per quarter throughout 2020, which will give it a $1.52 payout per share for the year. With a large enough investment, you can secure residual income through PFE stock to supplement any income lost during the coronavirus pandemic.

Should the coronavirus infections continue to escalate and its treatment be proven to work, the company will gain both the nearly $2 billion payout and the guarantee for a 5x multiplier on its return should the government cash in its right to buy the full 500 million doses. While Pfizer and Moderna have the early lead, don’t count out this next vaccine contender.

AstraZeneca Received $1.2Bn From The Government

AstraZeneca (NYSE:AZN) is partnered with Oxford University on a coronavirus vaccine called AZD1222 that is also in late-stage FDA clinical trials, although it’s facing a few more obstacles we’ll discuss in a moment.

The company received $1.2 billion in funding from OWS and has a guarantee in place with the U.S. government to provide 300 million doses of their treatment.

The company is also holding trials in Britain, where an adverse side effect temporarily halted trials in both the U.S. and U.K. Although the road is rockier, the company also has more upside on the backend, as it also counts the U.K. and European Commission as interested parties.

Like the U.S., they’re also pouring resources into AZD122, and the World Health Organization believes it’s the most promising of the vaccine studies.

Clinical trials are also under way in South Africa, India, and Brazil. This proposed treatment uses a non-replicating chimpanzee adenovirus with a SARS-CoV-2 spike protein to activate your body’s immune system and overcome the infection.

And like Pfizer, even if this vaccine doesn’t work out, the company still has a wide drug funnel that generated over $25 billion in the year leading up to the March 2020 coronavirus outbreak.

Of course, vaccines aren’t the only companies that saw a boost from the first outbreak that will likely be boosted again should there be a sequel. The company also maintained its quarterly dividend payments in 2020 and will end at $0.88 per share for the year.

Clorox Wipes Are In High Demand

The Clorox Company (NYSE:CLX) is more than just bleach and disinfectant wipes, but let’s discuss those for a moment.

Of all the products that went out of stock during the panic shopping rush in March 2020, disinfectants are still the hardest things to find.

The Center for Disease Control (CDC) continues recommending the usage of disinfectants to combat viruses, and the massive-and-still-growing list of FDA-recalled hand sanitizers is forcing consumers to stick to their trusted brands.

Not only that, but Clorox owns a lot of your favorite brands of cat litter (Fresh Step), charcoal (Kingsford), water filters (Brita), condiments (Hidden Valley), lip balm (Burt’s Bees), trash bags (Glad), and more. Even with the flu season picking up, back to school, and returning to normal life, many of the Clorox brands will get stocked up in your home.

Even though we’re facing a rough holiday season hit hard by a China-U.S. trade war, the coronavirus, and a presidential election, the National Federation of Retailers predicts retail sales will grow up to 4 percent this holiday season, and CLX stock will surely benefit from this when earnings for that quarter are announced.

CLX stock also maintained and even increased its quarterly dividend in 2020 to $1.11 per share. This gives it an annual payout of $4.44.

Zoom Video Communications Inc

Few companies had the Cinderella year Zoom (NASDAQ:ZM) did. The company’s value multiplied by four in the wake of the pandemic, as everyone from businesses to schools, families, clubs, and more went virtual.

Prior to Zoom’s break-out during the outbreak, Apple’s Facetime and Microsoft’s Skype were the biggest players in video calls.

Even Google and Facebook were heavily investing in the technology with their consumer smart screen devices. They all dropped the ball on the actual use cases, and that’s where Zoom picked up and ran with it.

Although the road has been rocky, Zoom is using its newfound fame and funding to improve its products to accommodate a larger user base. And that user base will get larger as more big events like CES 2021 go virtual. As the coronavirus picks up steam, expect Zoom to gain even further.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.