On Tuesday, Margaret Keenan of the United Kingdom was the very first person in the world to receive a COVID-19 vaccine outside of a clinical trial. (You likely have heard that a fellow named William Shakespeare was second in line.)
As soon as today, Canada is expected to begin administering the new Pfizer/BioNTech vaccine to its citizens. The United States, where the Food and Drug Administration is reviewing Pfizer’s vaccine, likely won’t be far behind.
And so, many investors once again are wondering how to trade the vaccine process as it plays out.
As the more famous William Shakespeare may have put it: “Too late, or not too late, that is the question.”
Back in early May, I offered a prediction about the development of a COVID-19 vaccine:
As far as potential COVID-19 stocks go… Moderna is a solid recommendation. It’s got the expertise and the funding to have a real shot at producing a working vaccine quickly.
I’m rooting for it — and for all the companies working on a vaccine.
When Moderna Inc. (NASDAQ:MRNA) announced the results of its clinical trials in mid-November, saying its vaccine was 94.5% effective, I didn’t make a big deal of my prediction.
After all, Pfizer Inc. (NYSE:PFE) and BioNTech SE (NASDAQ:BNTX) announced their results first. Plus, I had said Moderna was a good stock regardless of whether it developed a vaccine … and my prediction was largely a guess.
As I said in a later Smart Money issue, shortly after Moderna released positive Phase I data:
Moderna stock has soared as much as 70% since May 7 — and, as of Wednesday afternoon, shares are still up more than 45%.But I’m not going to brag here.
I can’t see the future. If I could, I would have told you about Moderna a few weeks or months earlier. Since mid-April it’s risen 91%, and it’s up an astounding 274% year to date.
All I did was scan the pharmaceutical companies working on a vaccine … filter out the microcap biotechs (they’re usually nothing but “lottery tickets”) … and pick the firm that I thought both had a good vaccine candidate and was a good stock worth holding long term.
It’s worth noting that, though Moderna didn’t announce its vaccine first, it did release a second round of results later in November, and those results showed that the vaccine prevented severe illness in addition to asymptomatic or mild COVID-19 cases.
But again, I am not here to hold a parade for myself.
Instead, I want to discuss what has happened to Moderna and the other companies announcing successful vaccine trials.
That’s because it illustrates something important — and potentially highly profitable — about investing.
Get On Board Early
Since the close on November 13, the last trading session before Moderna announced its vaccine results, the Cambridge, Mass.-based biotechnology company’s stock has risen more than 80%. (It’s up nearly 215% since I first talked about it here in early May.)
Since Pfizer and BioNTech announced their results, those stocks have risen by about 19% and 39% respectively.
AstraZeneca Plc (NASDAQ:AZN) also announced a successful COVID vaccine trial, but its shares have barely risen since its announcement.
Given that Pfizer’s vaccine has been declared safe and effective by the FDA (though not full approval, and there are many side effects), you might be tempted to buy the stock on the theory that it is due to rise as much as Moderna has.
Or maybe you want to buy AstraZeneca because it is lagging the other companies in this space.
But these aren’t sound strategies.
To begin with, the time to pick your horse in the vaccine race was months ago. These stocks were much cheaper before their trials started.
It’s also worth noting how inconsistent the stock market effects of the vaccine announcements have been. We haven’t yet heard anything from the FDA on Moderna, and yet, it has gained more than Pfizer, which has begun distributing its vaccine in the United Kingdom and Canada.
Even the major media outlets that frequently tout “hot stocks” are warning investors about the hazards of buying these.
To answer Mr. Shakespeare’s question, it’s “too late.”
So, while I’m glad my educated guess happened to be right about Moderna’s success in the vaccine race, I’m not going to tell you to get in on this stock while it’s on everyone’s radar.
In fact, I’d suggest the opposite approach.
Look for opportunities where other investors aren’t.
To Win Big … Go Small
We frequently talk about the massive division between technology companies, which are dominating the market, and non-technology companies, which are struggling.
We call this divide the “Technochasm.”
These “giants,” like Moderna right now, are widely followed and widely adored.
That’s because their past successes are well known and well rewarded by the stock market. But the stock market isn’t a museum; it’s a living, evolving organism.
That’s why we don’t care about what happened yesterday; we care about tomorrow. The future is what holds the large investment gains we hope to capture.
For example, I recently recommended to members of The Speculator a supercharged trade on a stock that I think is ready to take over space from one of the largest 5G technology companies in the world. This company that is taking market share from a giant in its field … and it’s cheap, too.
You can find my trade in a special report I put together called Three Stocks for 1,000% and Beyond.
5G is set to create more than $12 trillion in new wealth over the next few years. It will do so by providing the foundation for a whole host of “gee-whiz” technologies like:
- Autonomous vehicles.
- Healthcare technologies like telemedicine and remote robotic surgeries.
- “Smart factories” that integrate machine-learning processes with human oversight — i.e., “cobotics.”
- Internet of Things (IoT) — a vibrant, high-speed network of physical objects … things … that are embedded with sensors, software, and other technologies for the purpose of exchanging data and “communicating with” other devices, systems and/or people.
As recently as one year ago, China’s Huawei seemed like the leading horse in the race to deploy 5G technology worldwide. After all, the company is the world’s largest telecom equipment provider and holds a leadership role in many facets of the 5G market.
But there’s a hitch: The U.S. government distrusts China — and Huawei — and so do many other nations around the world.
Right now, nations around the globe are prohibiting Huawei from growing its business in key markets, leaving its competitors to take up that space.
And so, the Huawei competitor I recently recommended is now in the same position as the vaccine contenders were earlier this year.
In this case, it’s not “too late.”
Go here to find out how to get that Three Stocks for 1,000% and Beyond report.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south.