Please ensure Javascript is enabled for purposes of website accessibility

2 Top Stocks That Aren't On Wall Street's Radar

By Taylor Carmichael – Apr 4, 2020 at 7:39AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Adaptive Biotechnologies and Axsome Therapeutics are under-followed stocks with large upsides.

One of my favorite stocks right now is Adaptive Biotechnologies (ADPT -5.80%). You know how everybody and their mother is trying to find a cure for COVID-19? Here is how Adaptive is going about it: Instead of trying to decode this virus and understand its RNA, Adaptive is focusing on humans' immune response to it. 

How is it that some people can catch COVID-19 and have no symptoms? Adaptive wants to solve that mystery. And the company believes that if it can figure out how an immune system successfully responds to this virus, it will help us detect COVID-19, treat it, and maybe even provide a cure. 

DNA helix with computer image of human being.

Image source: Getty Images

Here's how the CEO, Chad Robins, described what the company is doing: "There is critical information held within the genetics of a patient's immune response to the virus and the disease patterns we can infer from studying the immune response at the population level."

Besides identifying asymptomatic patients, the data might also help doctors treat newly diagnosed patients who have a bad reaction to COVID-19. And, finally, the immune response data will help all the biotech companies that are trying to find vaccines and/or cures for this threat.   

Adaptive Bio is in the process of collecting blood samples from individuals who are diagnosed with or have recovered from COVID-19. The biotech company will sequence the immune cell receptors with machines from Illumina (ILMN -1.61%). Using its own technology, Adaptive will then map the specific antigens from COVID-19 that induce an immune response. Not surprisingly, since this is an insane amount of data, Adaptive will once again be working with Microsoft (MSFT -1.27%) and its machine-learning platform.

It's an exciting time to be an Adaptive investor. This emergency is giving the world a peek at the future of how we will fight diseases. Yet right now, only four analysts are following this company. Come on, Wall Street!

This under-followed company was the No. 1 stock of 2019

What Axsome Therapeutics (AXSM -3.75%) did last year was pretty cool. On Jan. 7, 2019, Axsome revealed positive phase 2 data from a clinical trial for one of its drugs, AXS-05, a treatment for major depressive disorder (MDD). The drug was wildly successful; 47% of patients achieved remission from symptoms after six weeks on the pill. 

That was just the start. Six months later, in June, Axsome initiated its phase 3 trial in the drug. That is a super-quick turnaround. (I wish all my drug companies were that fast.) Six months later, in December, Axsome reported the results from its phase 3 trial. And boom, the company had positive news yet again.

That said, don't get excited yet. That's just one drug. In March 2019, the company initiated a phase 3 trial for another drug, AXS-07, a treatment for migraine. Nine months later, in late December, Axsome released the results from this study. It was another winner. In this pivotal trial, AXS-07 defeated both placebo and rizatriptan, an FDA-approved migraine treatment.

We're still not finished! In December the company also announced positive phase 2 results from yet another drug, AXS-12, a treatment for narcolepsy. That's a sleeping disorder that affects roughly 3 million people around the world. 

One more and we are done: In April 2019, Axsome announced a positive read-out for its lead compound, AXS-05, in a completely different indication --smoking cessation. That's a large and fast-growing market opportunity. It's estimated that the market for products that help people quit cigarettes will reach almost $22 billion in four years. 

With all this good news for the company last year, you might be wondering what the stock did. It went up. It went way up. On Jan. 2, 2019, the company's stock opened the day trading at $2.81 a share. By the end of the year, when the stock market closed on Dec. 31, shares were valued at $104.69. That's not a typo; the stock had shot up 3,600% in one year.

Of course, in 2020 the company has had a couple of setbacks. (You can't go undefeated forever!) The company recently announced that AXS-05 missed its primary endpoint in a study for treatment-resistant depression. And of course, the stock took a hit (along with the rest of the market) when COVID-19 struck.

At a recent price of $54 a share, the stock is down almost 50% from its highs. This places its market cap at about $2 billion -- incredibly cheap, given the market opportunity going forward. If you missed this under-the-radar stock last year, now is a good time to jump in.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Taylor Carmichael owns shares of Adaptive Biotechnologies and Axsome Therapeutics. The Motley Fool owns shares of and recommends Illumina and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Axsome Therapeutics, Inc. Stock Quote
Axsome Therapeutics, Inc.
AXSM
$50.26 (-3.75%) $-1.96
Adaptive Biotechnologies Corporation Stock Quote
Adaptive Biotechnologies Corporation
ADPT
$6.50 (-5.80%) $0.40
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$237.92 (-1.27%) $-3.06
Illumina, Inc. Stock Quote
Illumina, Inc.
ILMN
$190.38 (-1.61%) $-3.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.