The early days of summer may not immediately prompt you to think of investing. You might be planning your vacation -- or you might even be on vacation already. But when you have a few quiet moments, now is actually a great time to add stocks to your portfolio. We've seen companies' first-quarter performances, and they've offered us some guidance about what to expect later on in the year.
Speaking of the future, two biotech companies may be heading for something big. One of them plans to file for regulatory approval of a potentially game-changing candidate. And the other may see a new wave of demand for its blockbuster product. These two make great stocks to buy right now in June -- before all the action later on this year.
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1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 0.11%) is a champion in the area of cystic fibrosis (CF) treatment. In fact, it's the worldwide leader. Vertex's blockbuster -- Trikafta -- brought in more than $1.6 billion in revenue last year. And the biggest threat to Trikafta is actually another Vertex candidate. That potential product is in phase 3 studies. The company predicts its market dominance will last at least through the late 2030s.
In spite of that market strength, investors have worried about Vertex's ability to expand beyond CF. But those worries soon may disappear. Vertex is heading for an exciting moment. Along with partner CRISPR Therapeutics, Vertex aims to apply for regulatory approval of a gene-editing candidate for blood disorders later this year.
What makes this candidate so special? CTX001 is designed to be a one-time curative treatment for beta thalassemia and sickle cell disease. Treatment options today are limited. So, a possible approval for the Vertex candidate could be big -- for patients and for the companies.
Vertex shares are trading at about 28 times trailing-12-month earnings. That's compared to more than 54 about two years ago. At the same time, revenue has soared.
VRTX PE Ratio data by YCharts
Even if you only consider Vertex's CF program, it's clear revenue will continue to climb. Trikafta hasn't yet reached all potential patients. For example, some live in countries where reimbursements haven't yet been approved. And Vertex is working on gaining approval in younger age groups. If we add to this the potential success of CTX001 -- and maybe other pipeline products down the road -- Vertex's growth might just be beginning.
2. Moderna
Moderna (MRNA 1.37%) isn't attracting as much attention these days as it did earlier in the pandemic. Many people already have gone for vaccinations and boosters. And the number of coronavirus cases in the U.S., for example, has dropped significantly from earlier this year. Moderna is still reporting billion-dollar revenue and profit. But investors worry that those days may soon come to an end.
That concern has weighed on Moderna's shares. They've dropped more than 40% since the start of January. And the stock is now trading at about four times trailing-12-month earnings. That's down from nine at the beginning of the year. This is a steal considering Moderna's future prospects.
Let's address the concern about a potential drop in revenue. It's possible vaccine revenue will decline. But I'm not convinced the movement will be drastic, for a few reasons. First, experts predict the coronavirus will stick around. So, at least the most at-risk people will need annual boosters.
Second, Moderna plans on significantly increasing its vaccine price once it begins selling directly to distributors instead of governments. We don't know when this shift will happen. But it could be as soon as this fall if Congress doesn't agree to fund vaccines for everyone. And finally, Moderna is working on candidates -- such as a combined coronavirus/flu vaccine -- that could appeal to a greater number of people in the future.
But why buy Moderna shares right now? A catalyst may be just ahead. Coronavirus cases peaked in winter months last year and the previous year. Moderna is already preparing a booster candidate that covers the original coronavirus and the omicron variant. And the U.S. Food and Drug Administration meets later this month to decide on whether to OK updating boosters for the fall season. So, vaccine demand may be just ahead. And that's why now is a good time to get in on the Moderna story.
