Plenty of healthcare stocks are faltering this year. Some companies are struggling to get their products in front of patients at the doctor's office while others have been stymied by elective surgery delays. However, many of the healthcare companies making diagnostic tests, developing coronavirus vaccine candidates, or combating the novel coronavirus in other ways have enjoyed millionaire-making gains since the start of 2020.

Beyond working in the coronavirus arena, all five of the following stocks have something else in common: Each one started off the year as small-caps and some were even micro-caps. While large-caps tend to be safer investments, this year's largest returns in the healthcare space have come from some of the smallest public companies. Many biotech and pharma companies are working to curb the COVID-19 pandemic, but healthcare investors have rewarded the following five stocks more than most. Let's dig into the top five healthcare stocks for the period between Jan. 2 and Aug. 24.

Benjamin Frankling wearing a mask on the face of a 100 dollar bill.

Image source: Getty Images

1. Novavax is up 2,890%

Shares of Novavax (NASDAQ:NVAX) have skyrocketed this year thanks to excitement about the small-cap's potential coronavirus vaccine, NVX-CoV2373. This was quite the reversal from 2019, when shares crashed after the biotech received bad news from a phase 3 trial for its respiratory syncytial virus (RSV) vaccine candidate, ResVax. The U.S. Food and Drug Administration (FDA) did not approve that vaccine, and Novavax held a 20-for-1 reverse stock split to avoid being delisted from the Nasdaq.

So far, 2020 has been a complete about-face. Opening at $3.99 on Jan. 2, Novavax stock zoomed to $119 by August 24.

What's fueled this run? The company has received positive news on two potential products. The first was NanoFlu, a vaccine candidate that could prevent influenza in patients 65 and older. NanoFlu outperformed the market-leading flu vaccine from Sanofi in its phase 3 trial, and Novavax expects to file for FDA approval later this year.

What's truly sent this stock higher is Novavax's COVID-19 vaccine candidate. If the coronavirus vaccine candidate receives an Emergency Use Authorization, it could conceivably get to the market before the flu vaccine. Novavax started phase 1 testing in May, and announced results in August. Phase 2 testing is underway, and the phase 3 trial is scheduled to start in September. The company has already lined up enough manufacturing capacity to produce 2.75 billion doses of the vaccine. This rapid pace has been enabled by $2 billion in grant money from the Department of Defense, the Coalition for Epidemic Preparedness Innovations (CEPI), and the White House's Operation Warp Speed (OWS).

2. Vaxart rose 1,990%

Once tiny Vaxart (NASDAQ:VXRT) has been neck-and-neck in a race with Novavax for best-performing healthcare stock of the year. The company was a penny stock on Jan. 2, trading for $0.34 a share, and by Aug. 24, its shares were priced at $7.36. The company is now valued at $800 million. Despite the spectacular rise, this micro-cap has only blossomed into a small-cap.

Can Vaxart go any higher? Probably. It specializes in oral vaccines, which distinguishes Vaxart from the majority of its competitors, most of which rely upon injections. A tablet is easier to store, distribute, and administer to patients. If Vaxart's COVID-19 oral vaccine proves to be safe and effective, the sky could just be the limit.

However, Vaxart's candidate is still a long way from approval. OWS is currently funding Vaxart's oral vaccine candidate in an animal trial. So while Vaxart could have an incredible market opportunity, the vaccine has yet to be tested on humans, making the stock a risky investment today. 

3. Co-Diagnostics jumped 1,310%

Small-cap Co-Diagnostics (NASDAQ:CODX) was trading at $0.90 per share at the beginning of the year. By Aug. 7, its stock had jumped to $25.73, though it has settled back down to $12 per share. When the diagnostic company debuted one of the first COVID-19 tests to market, its stock shot into orbit. However, more diagnostic tests have entered the picture and larger competitors like LabCorp (NYSE:LH) and OPKO Health (NASDAQ:OPK) are poised to steal testing sales out from under Co-Diagnostics.

Co-Diagnostics could bring in $80 million of revenue next year if its COVID-19 test continues to be purchased by the 15 U.S. states and various countries that have already deployed it. Unfortunately for the company, the testing market opportunity is small compared to the vaccine market opportunity. The federal government has already written billion-dollar checks to vaccine companies to pay for manufacturing and to stockpile hundreds of thousands of vaccine doses. None of the COVID-19 diagnostic companies are receiving similar support.

NVAX Chart

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4. iBio is up 1,070%

iBio (NYSEMKT:IBIO) is another vaccine stock that has skyrocketed this year. 

iBio is developing a vaccine candidate based on a virus-like particle (VLP) called IBIO-200. VLP vaccines are thought to evoke both antibody and cellular immune responses and interact with the body's immune cells differently than antigens. The company's "FastPharming" system should enable the company to scale production at a swift level if the coronavirus vaccine candidate is approved by the FDA.

After OWS cut its checks to vaccine companies like Novavax, speculators drove up the share price of other small-cap vaccine stocks in the hopes that some other players would receive federal grant money. But so far, iBio has been shut out. While the science might be promising and altogether intriguing, the company is deprived of cash -- it only has about $10 million today -- and has yet to start a phase 1 trial. 

5. Altimmune gained 783%          

The final vaccine biotech in the top five is Altimmune (NASDAQ:ALT). This company is very similar to Vaxart in that it sells vaccine candidates that are not administered via injection. But while Vaxart specializes in oral therapies, Altimmune is focused on nasal vaccines.

Altimmune's COVID-19 vaccine candidate is being tested in the lab at the University of Alabama-Birmingham. The company has reported positive data from an animal study, including that the potential nasal therapy evoked strong antibody production and boosted virus-neutralizing activity in cells within the respiratory tract. 

Altimmune plans to start its phase 1 trial in the fourth quarter of 2020. Altimmune has raised $200 million by selling off some shares after its run-up. At a market cap of $800 million, this small-cap trades at four times its cash. While that's a fairly cheap multiple, until this nasal vaccine is tested on people, it's a highly speculative buy.

Are any of these stocks buys today?

Novavax has risen from obscurity into the top four or five contenders in the COVID-19 vaccine race. It remains a risky stock, but its NanoFlu vaccine candidate should offer investors some cautious comfort. If you can stomach the regulatory risks, Novavax's upside is enormous.

Vaxart and Altimmune are intriguing companies, but without any human trial data on their vaccine candidates, only speculators are buying right now. Investors should probably stay away from iBio and Co-Diagnostics too, which face tough competition from larger competitors that are quickly commandeering market share.

        
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.