It makes perfect sense that investors have been fired up about the stocks of companies developing coronavirus vaccines. Several of them have absolutely skyrocketed over the last 12 months.
With two COVID-19 vaccines already on the market in the U.S., is it too late to invest in any of these coronavirus vaccine stocks? I don't think so. My view is that more gains could be on the way in 2021 for some of the stocks. However, if I could buy only one COVID vaccine stock, it would be Johnson & Johnson (JNJ 0.86%).
Let me first acknowledge that I don't think that Johnson & Johnson will be the biggest winner in terms of stock performance among COVID-19 vaccine makers. The company is simply too huge for any one product to serve as a jaw-dropping catalyst.
So why did I choose J&J? Because of Warren Buffett. No, I didn't pick Johnson & Johnson because Buffett owns the stock (although he does). Instead, I like the billionaire's famous investing rules: "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."
I believe that Johnson & Johnson is the coronavirus vaccine stock that provides the best chance at not losing money over the long term.
I believe this partly because of the company's long track record of success. J&J has been in business since 1886. It's survived and thrived through multiple recessions, wars, and pandemics. The company belongs to the elite group of stocks called Dividend Kings (S&P 500 members that have increased their dividends for at least 50 consecutive years).
I also like Johnson & Johnson's diversification. It runs hundreds of operating companies across the world. These companies market products and services that span much of the healthcare sector, from consumer items to medical devices to pharmaceuticals.
J&J's financial strength keeps its momentum going. The company invests heavily in research and development to remain a top player in its different markets. If J&J thinks it's falling behind in any area, it has the ability to make strategic acquisitions to fix the problem.
A potentially game-changing vaccine
You might have noticed that I didn't mention Johnson & Johnson's COVID-19 vaccine among the reasons for picking the stock. That's mainly because I'd like J&J even if it didn't have a vaccine at all.
Of course, J&J does indeed have a coronavirus vaccine in development. I think that this vaccine just might even be a game changer. All of the other leading COVID-19 vaccines require two doses. J&J could be the first to launch a single-dose coronavirus vaccine.
Note the use of the word "could." Johnson & Johnson expects to announce interim results from a late-stage study of its COVID-19 vaccine candidate later this month. I'm eager to see what the vaccine's efficacy will be with a single dose.
If the healthcare giant's single-dose COVID-19 vaccine proves to be both safe and highly effective, I predict J&J will become one of the biggest long-term winners in the coronavirus vaccine market. The cost advantages offered by a single-dose vaccine will be formidable.
What if J&J's single-dose vaccine only has so-so efficacy of around 70%? It could still be successful, particularly in developing countries. J&J is also testing a two-dose regimen in a separate late-stage study. Even if the single-dose vaccine isn't nearly as effective as current leaders, the company's two-dose version could be.
A safe bet
Some coronavirus vaccine stocks are poised to soar in 2021. They could double or more this year if their experimental vaccines are successful. That's a big assumption, though, that might not pan out. If the companies' vaccines don't deliver, the stocks could crater.
Johnson & Johnson probably won't deliver massive gains, but it's a safe bet that the stock won't wipe you out. Investors who adhere to Warren Buffett's two rules will like J&J. Over the long run, the big healthcare stock is more likely to make you a lot of money than lose you a lot of money.