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Here Are the Most Compelling Buys of the COVID Vaccine Stocks

By Brian Orelli, PhD - Jan 17, 2021 at 11:31AM

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Experts give their opinion of a conservative pick and a riskier one.

Investors have multiple options when looking for companies in the coronavirus vaccine market. In this video from Motley Fool Live, recorded on Jan. 4, Corinne Cardina, bureau chief of healthcare and cannabis, and Fool.com contributor Brian Orelli discuss two companies, Johnson & Johnson (JNJ -1.86%) and Novavax (NVAX 0.31%), which offer distinct opportunities for different types of investors.

Corinne Cardina: So as you survey the horizon of all the different companies involved, including the ones that do already have vaccines being administered, are any of these stocks particularly compelling buys today?

Brian Orelli: I don't know of any [among companies that are developing coronavirus [vaccines]. I think you can't go wrong with Johnson & Johnson if you're looking for a well-diversified conglomerate. I have enough exposure to the space and to the sector with my other individual investments. But I think if you don't have much exposure, I think that's a great choice. They paid a dividend -- [its yield is] above 2.5% -- and then they continued to raise that. Then it's run really efficiently. They tend to sell off businesses that aren't doing well, that aren't profiting well, and then buy businesses that they'll build on, and increase their bottom line. I wouldn't necessarily buy it for the coronavirus vaccine, especially as we talked about earlier, where they're not going to profit during the pandemic. But it's one you can buy and hold, and you don't have to follow it closely. So, if we're just looking for exposure to the sector, I think it's Johnson & Johnson, it's a good buy.

Then Novavax, I've been looking at this one more closely: The risk-reward looks reasonable, at least on the first guess; it's a $7 billion dollar market cap. I think there's some upside if the U.K. phase 3 is successful, which will come fairly soon. The slow rollouts of the vaccines could help, both in terms of enrollment for the U.S. phase 3, as well as potential sales down the line. Then of course we talked about [how] they can combine it with the flu vaccine, and that it already has developed phase 3 data, and so that could generate revenue next winter, either combined with the coronavirus vaccine, or just the flu vaccine on its own.

Cardina: Definitely. So it's got a couple of catalysts coming up in 2021.

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Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
NVAX
$52.11 (0.31%) $0.16
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$175.50 (-1.86%) $-3.32

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