A majority of Americans are now fully vaccinated for COVID-19. Many are now looking for a booster shot to keep them safe from COVID-19 variants. And down the road, vaccination will likely be an annual event.
1. Novavax stock is on the verge of greatness
Taylor Carmichael (Novavax): Novavax recently got its first Emergency Use Authorization (EUA) in Indonesia. But of course the really big news is coming up soon -- the biotech has filed for emergency listings around the world, including with the World Health Organization (WHO), India, the U.K., Australia, and Canada. Soon it will have finished its application in the EU, and it expects to file in the U.S. in a matter of weeks.
The stock is still down significantly from its $330 high set back in February. So there is significant upside for investors if and when all these filings are approved by regulators and the authorizations are issued. Many people around the world have not been vaccinated yet, and so the Novavax vaccine is sorely needed. In the U.S., the opportunity is limited to people who have yet to get the shot, and those who need booster shots.
Both the Pfizer and the Moderna (MRNA -1.93%) booster shots were limited to specific populations because of safety concerns. That might open the door to a sizable market opportunity for Novavax as a booster. The Novavax vaccine, NVX-CoV2373, has a pristine safety record so far. This safety profile of the Novavax vaccine -- along with the FDA's positive stance on "mix-and-match" vaccines (using a different vaccine as a booster) -- suggests that Novavax might have a significant slice of vaccine revenue in the U.S. next year.
2. This big pharma stock will give your portfolio a boost
George Budwell (Pfizer): Pfizer's shares have risen by an eye-catching 23.5% so far this year, making it one of the best performing large-cap pharmaceutical stocks in 2021. The drugmaker's shares have been propelled higher this year mainly by its BioNTech-partnered COVID-19 vaccine known as Comirnaty. Underscoring this point, Comirnaty hauled in a whopping $13 billion in sales in the third quarter of 2021. Moreover, this top-selling COVID-19 vaccine should continue to be major revenue generator for the company for a long time to come. Comirnaty, after all, was the first COVID-19 vaccine to get the green light from the FDA as a booster shot in certain patient populations.
But Pfizer's growth story isn't all about this mega-blockbuster COVID-19 vaccine. In its recent Q3 report, the company announced high-level sales growth for the Bristol Myers Squibb-partnered blood thinner Eliquis, the hereditary transthyretin-mediated amyloidosis medication Vyndaqel/Vyndamax, and the breast cancer treatment Ibrance. In fact, Pfizer's top line rose by a healthy 7% in the third quarter compared to the same period a year ago, even after excluding coronavirus vaccine sales. That's downright impressive levels of revenue growth for a large-cap pharma company.
What's particularly noteworthy about this big pharma stock, though, is its dividend. Despite its shares surging higher this year, Pfizer's shares still offer investors an attractive 3.57% dividend yield on an annualized basis. That's one of the highest dividend yields within the entire large-cap pharmaceutical space. What's more, the company has now paid out dividends to its shareholders for 331 consecutive quarters. Therefore, Pfizer's top-notch dividend program should appeal to investors for both its outstanding yield and dependability as a passive income vehicle.
3. The vaccine manufacturer agnostic choice
Patrick Bafuma (Walgreens Boots Alliance): When it comes time for a repeat jab, you may want to go back to the same facility that administered your first few doses. And if you are looking for a stock for the booster market, how about the pharmacy that has already administered over 40 million doses of the COVID-19 vaccine? That's Walgreens Boots Alliance.
In the fourth quarter, ended Aug. 31, the neighborhood pharmacy saw sales increase 11.8% year over year. The company's omnichannel approach seems to be working well as it experienced a triple-digit increase in digital sales, filling over 23 million same-day orders in the quarter. And with over 85 million myWalgreens members, if the company is able to develop strong customer relationships, that's a significant base to pull the lever of recurring revenues. Like, say, for annual influenza vaccines or for COVID-19 boosters, or for age-based shots such as the shingles vaccine.
The $40 billion healthcare company sports a hefty 4% dividend yield, and a solid track record of steadily increasing shareholder payouts over the last 15 years. Having just generated over $4.1 billion in free cash flow in the 12 month period ending Aug. 31, this trend of increased dividends does not seem to be in jeopardy any time soon. When you combine a 4% yield with just over 10% year-over-year growth, this pharmacy may not have to do much to beat the market. If it can retain some of those newly acquired myWalgreens customers while continuing to grow and improve its omnichannel delivery, shareholders may experience above-average gains with the safety of a long-running dividend payer.