As a writer, I spend most of my day staring at a computer. My eyes are a vital tool for my livelihood. So, a company such as Ocugen (NASDAQ:OCGN), which specializes in the development of therapies used to treat rare and underserved eye diseases, provides some interest.However, unless you are a penny-stock specialist, Ocugen stock is not something you have any business owning. Not now. Possibly never.
That said, if you’re as speculative as they come, the fact that OCGN stock has fallen by 85% since completing its merger with Boston-based Histogenics in late September, provides a good entry point if you’re looking for a potentially lucrative payday down the road.
For those that can’t afford to lose their investment, here are two possible ways to play Ocugen without putting the family home on the line.
A Bigger Eyecare Solution
As I like to say, investing is about options. With approximately 3,650 U.S. stocks in the Dow Jones Total Market Index, there are plenty of alternatives to OCGN.
For those absolutely committed to investing in an eyecare stock, it would seem that a natural choice would be Bausch Health Companies (NYSE:BHC), formerly known as Valeant Pharmaceuticals and the owners of the Bausch + Lomb eye care brand.
Bausch Health reported its third-quarter results on Nov. 3.
On the top line, it had revenues of $2.2 billion or 4% organic growth. On the bottom line, it had non-GAAP net income of $425 million, 5.5% higher than in the same period a year earlier.
Of the $2.2 billion in sales, the company’s Bausch + Lomb/International segment accounted for 53% of its overall revenue. As Bausch + Lomb goes, so goes BHC.
In September, former InvestorPlace feature writer James Brumley recommended its stock, suggesting that the company is starting to grow sales again — 1.6% in 2019 and 3.0% in 2020 — providing for real earnings growth, the ultimate driver of stock prices.
Up 55% year to date through Dec. 2, CEO Joseph Papa has got the company back on track.
At the very least, it’s a much safer eye care bet than Ocugen.
A Second Option
Usually, I would suggest a healthcare exchange-traded fund as a good alternative, but there aren’t any that hold Ocugen stock.
One of the two ETFs that do own OCGN is the Vanguard Extended Market ETF (NYSEARCA:VXF). It has 3,296 stocks and tracks the performance of the Standard & Poor’s Completion Index. Healthcare stocks account for 12.5% of the ETF’s $7.4 billion in total net assets. As for Ocugen itself, VXF owns 162,104 shares of OCGN stock, a minute piece of the overall portfolio.
Another possibility is to buy an ETF such as the Vanguard Healthcare ETF (NYSEARCA:VHT), which invests in 387 healthcare stocks; small caps and micro caps account for 6.3% of the ETFs $10.3 billion in total net assets.
If Ocugen manages to grow its business down the road, it could be added to the ETF, but I wouldn’t expect that to happen for two to three years.
The Bottom Line on Ocugen Stock
Like many clinical-stage biopharma companies, Ocugen has no revenues.
In the first nine months of 2019, it generated a $32.6 million net loss, almost three times the loss of a year ago. Its losses are only going to get bigger as the development of its drugs intensifies.
If you’re an eye doctor, it might be a good speculative buy. The same goes for the independently wealthy. For everyone else, it’s merely a stock to follow with interest.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.