Some investors view October as a terrible month for stocks. That take seemed to gain credence earlier this month as the stock market pulled back, although stocks have largely recovered since. In this Motley Fool Live video recorded on Oct. 6, Motley Fool contributors Keith Speights and Brian Orelli discuss three stocks to consider buying if the stock market sell-off worsens.
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Keith Speights: We're talking and we're nearly a full week into October right now, the stock market is off to a rocky start so far this month, quite a few biotech stocks and other healthcare stocks as well are down quite a bit already.
Are there any, Brian, that you think stand out as especially good picks to buy if this sell-off worsens going forward?
Brian Orelli: I'd look for companies that have near-term catalysts, so that should help them revert to their true value if the catalysts are positive and that's an if but assuming that's the case, that should helped them substantially.
One is Ionis Pharmaceuticals (IONS 1.79%). It's actually down 70% over the last 30 days approximately. It has an anti-sense pipeline with quite a few different drugs. But one of the investors should be looking at right now is a phase 3 drug called the Tofersen for ALS and we're expecting the data from that clinical trial this fall.
Then Novocure (NVCR 0.73%) would be another one. It's down 20% over the last month. It's a medical device company. They create devices that produce tumor-treating fields, the device can actually stop the tumor from growing.
It's already proven it out in some brain cancers. But it's testing it for a whole bunch of other different types of cancer. It adds interim phase 3 data for ovarian cancer that's expected in the third quarter and then there's two phase 3 readouts, one interim and one final for different trials in 2022, as well as some phase 2 data. That gives you quite a few different options for reversion to the actual valuation.
I own both those two companies and then I'll give you one more that I've been looking at. But I haven't pulled the trigger yet. I really just like it to drop back to Friday's levels that's Atea Pharmaceuticals (AVIR 0.98%), ticker there's AVIR. It jumped on Merck (MRK -1.14%) and Ridgeback's news for their oral COVID-19 treatment and that's because Atea has oral COVID-19 treatment that it's developing with Roche.
I don't think Merck's results necessarily give me really better confidence that Atea's drug will work. Maybe slightly because now we know that at least treating people who haven't gotten in the hospital yet can work with an oral drug and the two drugs work in the same way, but not enough that I have much confidence that one working would make me more confident that the other one would work.
The market cap is around $3.5 billion, so maybe it's still an OK valuation at this point. I'm still analyzing it, but I sure would like it to drop a little more to make the risk/reward profile a little better.
Speights: Everyone keep your eyes on Ionis, Novocure, and Atea. Those are stocks that Brian is watching and two of them he owns.