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These Were the 10 Best Healthcare Stocks of 2020

By Taylor Carmichael - Dec 15, 2020 at 6:35AM

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The highest performers of the year are biotechs fighting COVID-19 and cancer. Are they still buys for 2021?

Many of the best stocks in 2020 were healthcare companies focused on two disease areas: trying to stop the spread of COVID-19 and improving survival rates from cancer. To find out which stocks provided the highest returns for investors in a year defined by an unprecedented pandemic, economic turmoil, and a presidential election, we measured the stock market from Jan. 1 to Dec. 1 and looked at all investments with market caps above $200 million. Not surprisingly, many of the top performers were in the healthcare sector.

Here are the top healthcare stocks in 2020 and whether they're still strong buys going into 2021.

"Top 10" drawn on a window and circled.

Image source: Getty Images.

1. Novavax: Up 3,100%

The rise in Novavax ( NVAX -11.60% ) from micro-cap to mid-cap has been breathtaking. The vaccine specialist has two potential blockbuster drugs in its pipeline: one for influenza and one for COVID-19. The company is planning to eventually pursue a COVID-19/flu vaccine combo.

The company reported positive phase 3 data from its flu shot candidate, Nano-Flu, in March. But what sent shares skyrocketing is the possibility of its COVID-19 vaccine being authorized by the U.S. Food and Drug Administration. The company is in the middle of pivotal trials and data readouts are expected in the first quarter of 2021.

NVAX Chart

NVAX data by YCharts

2. Vaxart: Up 2,100%

Vaxart's ( VXRT -8.70% ) stock has grown from micro-cap to small-cap in 2020 due to its own development of a COVID-19 vaccine candidate. While Novavax received $1.6 billion from Operation Warp Speed, Vaxart did not pull in any federal funding and had to issue stock to fund its phase 1 trial.

Despite its slow progress, investors are very excited because unlike all the major vaccine candidates, Vaxart's COVID-19 vaccine is a pill, not a shot. Any good news will propel this stock further into the stratosphere.    

3. Cardiff Oncology: Up 1,400%

Cardiff Oncology ( CRDF 0.76% ) had a minuscule $10.6 million market cap at the beginning of the year. Its valuation now? Almost $700 million.

One of its cancer drugs (licensed from a private company for $2 million), is now looking like a future billion-dollar molecule. The company reports that its lead drug candidate, onvansertib, is achieving success against KRAS-mutated tumors in the colon. The molecule is also being tested in phase 2 trials in prostate cancer and leukemia. While Cardiff hasn't reached pivotal trials yet, the early data had investors snapping up shares this year.

4. Co-Diagnostics: Up 1,100%

Co-Diagnostics ( CODX -0.24% ) ran up from a $15 million valuation to $300 million, emerging from obscurity when it provided an early diagnostic test for COVID-19.

Co-Diagnostics has products on the market and is highly profitable. Early sales of its diagnostics have caused revenue to jump to $47 million in the first three quarters of the year, its sales growth soared over 50,000% in the third quarter, and it boasts a well-padded 63% profit margin.  

5. Trillium Therapeutics: Up 1,000%

Trillium Therapeutics ( TRIL ) is another biotech that's been on a wild ride this year, jumping from a market cap of $29 million to $1.2 billion. The company specializes in drugs that shut down the CD47 protein in cancer cells, which instructs the immune system to leave the cancer cells alone. Shutting down the protein allows the immune system to kill the cancer cells.

In March, Gilead Sciences acquired another CD47 specialist, Forty-Seven, for $4.9 billion. While Trillium's drugs are only in phase 1 trials, early data suggests they could one day be best-in-class.    

6. Arcturus Therapeutics: Up 940%

mRNA vaccine developers Moderna ( MRNA -13.49% ) and BioNTech ( BNTX -18.67% ) made headlines this year as their COVID-19 vaccines proved to be safe and effective. Arcturus Therapeutics ( ARCT -6.51% ) is another mRNA specialist, but is much earlier in the vaccine race due to a lack of funds. Nonetheless, investors have made out very well, as the market got excited about mRNA technology. Arcturus has vaccine candidates for COVID-19 and the flu, and also has a variety of other mRNA drugs in clinical trials, including a possible treatment for cystic fibrosis.    

7. Celldex Therapeutics: Up 740%

Celldex ( CLDX 2.07% ) shares sold for $2 in January and now its stock trades at nearly $19. The biotech has two cancer drugs in phase 1 trials, and another phase 1 drug for urticaria, an inflammatory disease that causes hives. Getting the drugs into clinical trials was a major milestone and helped propel Celldex stock to the sky.

8. Retractable Technologies: Up 730%

2020 gave Retractable Technologies ( RVP 1.61% ) a huge breakthrough. This company makes syringes with automatic retractable needles which is of vital importance during the pandemic because an accidental needle stick can infect medical workers with a patient's disease. Retractable saw huge revenue gains as the federal government stockpiled its syringes to vaccinate people for COVID-19. 

9. Moderna: Up 700%

2020 has been a huge year for Moderna. The stock market was already bullish about the company's mRNA platform before the year began, giving Moderna a $6 billion market cap in early January, even though the company has no drugs on the market.

The COVID-19 pandemic allowed the company to show what it could do. Moderna discovered its vaccine candidate very quickly and was able to produce a vaccine with 94.1% efficacy. Now Moderna's market cap is $61 billion, driven by the excitement for its vaccine but also for the rest of its pipeline which has been validated by the proof-of-concept evidence for mRNA.

10. Seres Therapeutics: Up 630%

Seres Therapeutics ( MCRB -6.18% ) specializes in microbiome pharmaceuticals. Seres is especially interested in the genetic material of all the microscopic bacteria that exist in the gastrointestinal tract. The company seeks out gut bacteria that is beneficial to overall human health.

Seres is collaborating with Nestle on a drug in phase 3 trials for clostridium difficile (better known as C. diff), a type of colitis that affects half a million Americans every year, and a phase 2 drug for ulcerative colitis.  

Best bets for 2021?

Novavax, the best stock in 2020, will continue to soar if the data published in a few months from its phase 3 trials are positive. Moderna investors might want to start taking some profits now, as the stock is richly valued. If you're intrigued by mRNA technology, you might use some of that money to buy shares of Arcturus, a much smaller company with significant upside. Trillium and Seres have exciting drug platforms that investors should watch closely. 

2020 has been a rough year for most, but investors in these 10 stocks had a silver lining. The end of the year is a great time to reevaluate your portfolio and make decisions about what to buy and sell going into 2021. Some of these top healthcare stocks may just be getting started.

          
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.

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Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
NVAX
$141.86 (-11.60%) $-18.62
Celldex Therapeutics, Inc. Stock Quote
Celldex Therapeutics, Inc.
CLDX
$36.42 (2.07%) $0.74
Nestle S.A. Stock Quote
Nestle S.A.
NSRGY
$131.50 (1.44%) $1.86
Cardiff Oncology, Inc. Stock Quote
Cardiff Oncology, Inc.
CRDF
$5.28 (0.76%) $0.04
Seres Therapeutics Stock Quote
Seres Therapeutics
MCRB
$10.02 (-6.18%) $0.66
Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$265.33 (-13.49%) $-41.39
BioNTech SE Stock Quote
BioNTech SE
BNTX
$279.83 (-18.67%) $-64.23
Trillium Therapeutics Inc. Stock Quote
Trillium Therapeutics Inc.
TRIL
Co-Diagnostics, Inc. Stock Quote
Co-Diagnostics, Inc.
CODX
$8.33 (-0.24%) $0.02
Vaxart, Inc. Stock Quote
Vaxart, Inc.
VXRT
$5.77 (-8.70%) $0.55
Arcturus Therapeutics Holdings Inc. Stock Quote
Arcturus Therapeutics Holdings Inc.
ARCT
$34.60 (-6.51%) $-2.41
Retractable Technologies, Inc. Stock Quote
Retractable Technologies, Inc.
RVP
$7.59 (1.61%) $0.12

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

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