You'll find plenty of biotechs among the top 100 most popular stocks on the Robinhood trading platform. Most of them are small-cap biotechs with no products on the market.
What you won't find on Robinhood's top 100 list are very many big pharma stocks. But that doesn't mean there are no large pharmaceutical companies on the list. Here are two big pharma stocks that Robinhood investors really like -- and that you may like, too.
Going big...really big
Although Robinhood investors appear to favor small drugmakers, they're going big -- actually, really big -- with one choice. Johnson & Johnson (NYSE:JNJ) ranks as the largest healthcare company in the world, with its market cap approaching $400 billion.
Robinhood especially appeals to younger investors. While these individuals seem to prefer stocks with tremendous growth prospects, I suspect they're attracted at least somewhat by J&J's stability. The company has been in business since 1886, surviving and thriving in three different centuries.
It wouldn't be surprising if Robinhood investors also really like J&J's dividend. The company belongs to the elite group of stocks known as Dividend Aristocrats, S&P 500 members that have increased their dividends for at least 25 consecutive years. J&J easily clears the bar, with an impressive streak of 58 years in a row of annual dividend hikes.
However, I think that J&J's prominence in the race to develop a COVID-19 vaccine could also be attracting attention from Robinhood investors. While Johnson & Johnson is behind several other companies in advancing to clinical testing, the potential for its vaccine candidate to be administered in a single dose gives J&J a key advantage over most of its rivals.
A sleeping giant
The other big pharma stock on Robinhood's most popular stocks list is even older than Johnson & Johnson. Pfizer (NYSE:PFE) was founded way back in 1849. Its market cap of $213 billion puts Pfizer in a neck-and-neck race with Merck and Novartis as the second-biggest drugmaker in the world behind J&J.
My hunch is that Robinhood investors also like Pfizer's dividend. Although the company isn't a Dividend Aristocrat like J&J, its dividend yield of nearly 4% is quite attractive.
But I think that the more important draw for Pfizer is that it could be a sleeping giant. The company hasn't achieved much growth in recent years due to the loss of patent exclusivity for some top drugs, notably Lyrica. That could change soon, though, with Pfizer planning to spin off its Upjohn unit (which is home to those off-patent drugs) and merge it with Mylan later this year.
This move will dramatically boost Pfizer's growth prospects, since the parent will retain blockbuster products such as blood thinner Eliquis and breast-cancer drug Ibrance. Pfizer is also a leader in the COVID-19 vaccine race thanks to its partnership with German biotech BioNTech. It's possible that Pfizer could be among the first to seek emergency use authorization from the Food and Drug Administration, potentially as early as late 2020.
The better pick
Robinhood investors have good reasons to like both of these big pharma stocks. But which is the better pick? I'd go with Pfizer.
My take is that Pfizer will deliver stronger growth than Johnson & Johnson over the next decade. I'm optimistic about the company's chances of approval for its COVID-19 vaccine candidate and other pipeline candidates, including experimental pneumococcal vaccine PF-06482077. I believe several of Pfizer's current drugs, particularly Eliquis and rare-disease drug Vyndaqel, will continue to enjoy strong sales momentum.
I also expect Pfizer's dividend to remain strong. Sure, it will decline a little after the Upjohn-Mylan deal closes. However, the combination of a still-attractive dividend with the company's improving growth prospects makes Pfizer a big pharma stock that nearly any investor should like.