While the coronavirus has walloped the stock market this week, many traders have jumped into a safe haven: small-cap healthcare companies that are fighting the disease. For instance, Novavax (NVAX -4.82%) has been on a tear all year. The tiny biotech started off 2020 with its stock priced at $3.99 a share; now, the stock sells for $16.
Vir Biotechnology (VIR -5.10%) has had a similar rocket ride. The company had a broken IPO last year and it's up 282% in 2020.
But the biggest winner has been tiny Co-Diagnostics (CODX). The Utah diagnostic company started the year as a micro cap. Its stock has had an amazing run in 2020, up 1,353% in two months.
Image source: Getty Images.
How are the large caps doing?
There are probably a dozen healthcare companies that are working on a vaccine or cure for the coronavirus. These include mega-cap names like Sanofi, Johnson & Johnson, and GlaxoSmithKline, as well as larger biotechs like Moderna, Gilead Sciences, and Regeneron. Yet the market has been rewarding these names only slightly, and in some cases, not at all.
| Stock | Price on January 2 | Price on February 28 | Percentage Return |
|---|---|---|---|
| Johnson & Johnson | $145.87 | $134.48 | (7.9%) |
| Sanofi | $50.58 | $46.25 | (8.7%) |
| GlaxoSmithKline | $46.81 | $40.53 | (13.6%) |
| Gilead Sciences | $65.53 | $69.36 | 6.3% |
| Regeneron | $378 | $444.57 | 19.08% |
| Moderna | $19.57 | $25.93 | 34.84% |
| Vir Biotechnology | $12.56 | $46.50 | 282% |
| Novavax | $3.99 | $16 | 300% |
| Co-Diagnostics | $0.90 | $13.23 | 1,353% |
Chart by author.
The small-cap names have done much, much better than the mega caps. For investors looking for a safe haven in the coronavirus meltdown, smaller is probably better.
