Is It Time to Pounce on Covid Vaccine Stocks?

Several companies beyond the health care space could benefit

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Nicholas Kitonyi
Dec 08, 2020
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Last month, the stock market responded positively to the news of a potential Covid-19 vaccine. While the initial impact of the news appears to be dissipating, now may be the right time to look at stocks that could fundamentally benefit from potential sales related to the vaccine.

So far, three companies listed on the U.S. stock exchange have stood out amid positive results from clinical trials. Pfizer Inc. (

PFE, Financial) and BioNTech SE (BNTX, Financial) were the first to declare an efficacy rate of more than 90% for their Covid-19 vaccine.

A week later, Moderna Inc. (

MRNA, Financial) also said it had achieved an efficacy rate of close to 94%.

Elsewhere, the U.K.'s AstraZeneca PLC (

AZN, Financial), together with Oxford University, also announced it made significant progress, while China's Sinopharm Holdings Co Ltd. (HKSE:01099, Financial) announced late last month to have vaccinated over 1 million people. The positivity triggered by the vaccine news has helped the Dow Jones Industrial Average to rally to new historical highs of over 30,000 points as more stocks continue to recover.

Stock trading opportunities to watch

On Tuesday, the U.K. became the first country to administer Pfizer's covid vaccine to a patient following last week's approval. The U.S. has ordered more than 100 million doses of the vaccine, which, depending on the outcome from the U.K. patients, could signal more upside potential for the stock.

But more importantly, investors will be looking at all the companies that are developing Covid-19 vaccines and the advantages they hold over what is already on the market. This could result in some significant investment opportunities. Pfizer and BioNTech'sCcovid vaccine requires extremely cold storage facilities to remain active, while Moderna has reportedly said that its vaccine can easily work within normal refrigeration temperatures.

This could be perceived as an advantage for Moderna's vaccine, but it could also be an opportunity for cold chain supply companies like Carrier Global Corp. (

CARR, Financial) and Trane Technologies PLC (TT, Financial). From here on, we could easily write a long list of stocks that could benefit given the number of vaccine doses that will need to be shipped globally. Stock trading opportunities in this list could also extend to several other segments of the health care sector, which includes medical equipment companies like Medtronic PLC (MDT, Financial), Abbott Laboratories (ABT, Financial) and Boston Scientific Corp. (BSX, Financial).

Last month, Medtronic said that its top line had suffered from movement restrictions and overworked hospital systems amid the Covid-19 pandemic. It also said it now expects a significant rebound and a potential return to pre-pandemic revenue levels in the fourth quarter following Pfizer's announcement.

Therefore, while a lot of attention will be directed toward the likes of Pfizer, Moderna and AstraZeneca, there are several other trading opportunities to watch that investors could look to pounce on. The supply chain is a good area to start looking, given the massive task of shipping the vaccine globally. In fact, this segment of the market could be more profitable since Pfizer and Moderna's share prices may have already priced in the potential revenues associated with vaccine sales.

Shares of Pfizer and BioNTech are up 22% and 52% since the start of November. Moderna has rallied more than 153% over the same period. On the other hand, Carrier Global and Trane Technologie are up 10% and 6.7%.

Conclusion

In summary, the news of positive progress in the development of a Covid-19 vaccine has restored some much-needed optimism to the market. Several stocks have responded positively, but some companies could be set to benefit more than others.

While some apparent candidates like Moderna appear to have already priced in the expected earnings from the vaccine sales, the list of stocks that could benefit going into the tail end of the year extends beyond the health care sector.

Disclosure: No positions in the stocks mentioned.

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Nicholas is the founder of CAGR Value. He is a financial analyst with extensive experience in investment research and stock market analysis. His analysis has been featured on several research sites. Nicholas has solid knowledge of both U.S. and European markets. His investment style is focused on undervalued plays and growth stocks. Nicholas classifies himself as a swing trader and likes to trade GBP/USD, gold and FTSE 100, among other liquid instruments.