Pfizer (NYSE:PFE) ranks as one of the giants of the pharmaceutical market, with a blockbuster vaccine franchise. Novavax (NASDAQ:NVAX) is only a fraction of Pfizer's size and is still at least a few years away from marketing its first vaccine -- if all goes well.

But size, and even revenue, doesn't necessarily make one stock better than another in the biopharmaceutical world. Instead, the potential for growth can make a small stock more attractive to investors than an established stock. So which of these two stocks is the better pick now? Here's how Novavax and Pfizer compare.

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The case for Novavax

Novavax remains unprofitable. Its only revenue stems from research and development collaborations and a few government contracts here and there. But the company's pipeline candidates hold the potential to change Novavax's fortunes dramatically.

Its lead pipeline candidate is an experimental respiratory syncytial virus fusion (RSV F) vaccine. Even though RSV is an enormous problem worldwide, there aren't any approved vaccines for the virus. AstraZeneca's Synagis is the primary therapy used to help prevent RSV, but it's not a vaccine and is only available for treating high-risk babies.

Novavax expects to announce results from a late-stage study of its RSV F vaccine in infants through maternal immunization in 2018. The company also has a phase 2 study under way for the vaccine in immunizing older adults, as well as an early-stage study for pediatric use in children between 6 months and 5 years old.   

While the company also has early-stage development in progress for an Ebola vaccine, more excitement has been generated recently by its nanoparticle influenza vaccine NanoFlu. In August, Novavax announced preclinical results for NanoFlu that were so promising that the company shifted into high gear to accelerate clinical testing of the vaccine. A phase 1/2 study is now under way, with hopes that a pivotal late-stage study could start late next year.

Even with AstraZeneca's product on the market, around 1.9 million infants are infected in the U.S. with RSV each year. The estimated global cost related to RSV is estimated to be more than $88 billion. The market opportunity for an effective vaccine is huge. The same is true for influenza. Sanofi made $1.6 billion for its leading flu vaccines last year. Novavax thinks NanoFlu could be more effective than Sanofi's top vaccines, Fluzone and Fluzone HD. With a current market cap of around $330 million, Novavax has a pipeline whose success could make the company much bigger down the road.

The case for Pfizer

Pfizer has been a favorite among investors for a long time. Probably the strongest argument for buying Pfizer stock is that the company generates tremendous cash flow -- $13.3 billion over the past 12 months -- and it uses that cash flow to reward shareholders. 

Exhibit A in how Pfizer uses its cash flow in ways that investors like is the company's dividend. Pfizer's dividend currently yields 3.63%. To appreciate just how important this dividend can be, look at Pfizer stock's performance over the past five years. The stock has gained around 45% during the period, but reinvesting dividends boosts the total return up to nearly 73%.

The company has also invested heavily in research and development, ranking third in the biopharmaceutical industry in R&D investing last year. Thanks to its commitment to R&D, Pfizer's pipeline includes 32 late-stage programs and another 45 programs in early- and mid-stage testing. 

Some of those pipeline candidates, as well as current products, came from another key way Pfizer uses its strong cash flow: making acquisitions. Prostate cancer drug Xtandi was picked up through Pfizer's acquisition of Medivation. Pfizer gained atopic dermatitis drug Eucrisa from its buyout of Anacor Pharmaceuticals. The company has repeatedly hinted that more acquisitions could be on the way.

Another way Pfizer can create significant value for shareholders is through divestitures and spin-offs. Pfizer's spin-off of animal-health business Zoetis in 2013 has been a big win for investors. The company is now evaluating the possibility of either selling or spinning off its consumer healthcare business, which could also be beneficial to shareholders. 

Better buy

In my view, the choice between Novavax and Pfizer boils down to the old adage that "a bird in the hand beats two in the bush." Novavax could be a huge winner if its pipeline candidates are successful. However, there is no guarantee that will happen. The company has encountered some clinical setbacks already with its RSV F vaccine. And it's still really early for NanoFlu.

With Pfizer, on the other hand, you pretty much know what you're getting. The company could experience its own clinical setbacks, but its pipeline is so large that it should be able to weather problems relatively well. Pfizer faces some challenges from declining sales of legacy drugs, but those issues should diminish over the next few years.

The rewards could be bigger with Novavax than with Pfizer, but the risks are also much greater. I agree with the old saying that "a bird in the hand" is the better choice. The better buy, in my opinion, is Pfizer.

Keith Speights owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.