When the history books are written, 2020 will go down as the year of the COVID-19 pandemic. However, 2021 could very well be viewed as the year of the COVID-19 vaccine. Two vaccines are already being given to Americans. More vaccines could be on the way in the not-too-distant future.
Every crisis presents an opportunity. That's true now for investors, with several coronavirus vaccine stocks offering tremendous potential. Some alternatives are better than others, though. Here are three COVID vaccine stocks that smart investors are buying for 2021.
There aren't many smarter investors alive than Warren Buffett. And Buffett's Berkshire Hathaway has bought one and only one COVID vaccine stock in recent months. That stock is Pfizer (NYSE:PFE). I think other investors won't go wrong by following the lead of the Oracle of Omaha in this case.
Pfizer and its partner BioNTech could rake in more than $14 billion next year from sales of coronavirus vaccine BNT162b2 based on Bernstein analyst Ronny Gal's estimate. With Pfizer pocketing half of those sales, the COVID vaccine could be a nice catalyst for the big pharma stock.
But BNT162b2 is just one of many growth drivers for Pfizer. Blood thinner Eliquis, cancer drugs Ibrance and Xtandi, autoimmune disease drug Xeljanz, and rare disease drug Vynaqel stand at the top of the list. The big drugmaker also has another promising vaccine on the way with 20-valent pneumococcal conjugate vaccine PF-06482077.
Pfizer thinks that it will be able to generate annual adjusted earnings-per-share growth of around 10% over the next five years. With the company's solid dividend (which currently yields more than 4%) thrown in, the stock should be in a great position to deliver market-beating returns. That's exactly what smart investors like Warren Buffett want.
2. Johnson & Johnson
At the beginning of the fourth quarter of 2020, Johnson & Johnson (NYSE:JNJ) ranked as the 29th most popular stock among hedge funds. That made the healthcare giant the top COVID vaccine stock for hedge fund managers.
I think Johnson & Johnson is the safest bet of all among COVID vaccine stocks. The company's size and diversification give it a rock-solid stability that no other vaccine maker can touch. Like Pfizer, J&J also offers an attractive dividend.
What about J&J's coronavirus vaccine? Don't be surprised if it becomes a huge winner next year. The company expects to announce interim efficacy results from a large late-stage study in January. If all goes well, the vaccine could win emergency use authorization (EUA) and be on the U.S. market in February.
J&J's vaccine has a couple of major advantages. Perhaps most importantly, it requires only a single dose. All of the other leading COVID vaccines require two doses. J&J is also making its vaccine available at cost during the pandemic. Once the pandemic is over, the company will look to make profits -- and it's quite possible those profits could be significant.
Smart investors seek really good risk-reward propositions with the stocks they buy. I think that Novavax (NASDAQ:NVAX) ranks as one of the best COVID vaccine stocks on this front.
For one thing, Novavax's market cap of around $8 billion is only a fraction of the other leaders in the coronavirus vaccine race. And that's despite the biotech stock skyrocketing more than 3,000% so far this year. Novavax also has a very promising COVID vaccine, NVX-Cov2373. It expects to announce results from a late-stage U.K. study in early 2021 and hopes to begin a late-stage study in the U.S. within weeks.
Even better, Novavax has another great candidate that's likely to win regulatory approvals. The company reported overwhelmingly positive results from a late-stage study of experimental flu vaccine NanoFlu earlier this year. At least one analyst thinks that NanoFlu could generate peak annual sales of up to $1.7 billion if approved.
Should Novavax bring both NVX-Cov2373 and NanoFlu to market, I wouldn't be surprised for its shares to double or more. Novavax is the riskiest of these three COVID vaccine stocks, but it could be the biggest winner by far if all goes well.