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Covid 19 vaccine stocks are trending right now. Investors are jumping on buying them as we approach a solution to stop the pandemic that shaped the year 2020. But are all these Covid-19 stocks trending just because of hype? What are some COVID-19 related stocks that aren’t getting much media love? What would be the best investing strategy with undervalued COVID-19 stocks heading into 2021?
Before I reveal my top 5 stocks in this category, keep in mind that a COVID-19 vaccine-related stock doesn’t have to just be a stock that’s producing the vaccine. Those types are in fact the ones that are getting the MOST media attention and almost all of them are super hyped up right now. That includes Moderna, BioNTech, Pfizer, and AstraZeneca.
About Todays Top Undervalued Stocks Related to CVOID-19
My goal today is to stay away from the hype and shine a light on the covid 19 vaccine-related stocks that…
- Have a lower chance of being a boom or bust.
- Have a wider economic moat which would help them knock down their competitors and stay on top over the long run, even after the whole pandemic thing is behind us.
- Those that are currently undervalued which means you can buy them at an optimal price today.
- Those that at least pay a fair amount of dividend so you can earn some cash on a quarterly basis while riding out the hype.
There are actually over 60 Covid 19 vaccine-related stocks that are getting the buzz. But some of them are getting more hyped up than others right now, while others’ momentum is either slowing down or outright dead.
As a value growth investor with a special love for dividend-paying stocks, I’m going to filter out the COVID 19 vaccine stocks that I don’t want to invest in right now, and then create my top 5 list that I personally will be or am already investing in.
In today’s analysis, I’m only looking at stocks that are listed on the NYSE and Nasdaq. I’ll avoid penny stocks and focusing only on stocks that have either a good or neutral growth potential.
Undervalued Stock #5: Johnson & Johnson (JNJ)
Johnson & Johnson (JNJ) is one of the largest companies on the list and pays one of the highest dividend payments at a 2.69% yield but its stock price hasn’t been performing very well since 2017 and has actually mainly been consolidating below the all-time-high of 157 mainly due to a ton of legal actions that have been taking place against some of its drugs, and the fact that Johnson & Johnson’s important drugs are facing increasing competition, which could slow the growth rate of the drug group.
But while its growth is struggling like a fish out of water, it remains a valuable company that has an A+ profitability rating that once it gains its momentum back, could expose your portfolio to some sizable capital gains. The company is so large that investing in it solely based on Covid-19 vaccine-related news is not even relevant.
Looking at the chart, we notice the future Ichimoku cloud is flat while slightly bullish. The price has just broken above it with a mild momentum behind it. The company’s final quarter ex-dividend date was on November 23rd. So if you’re investing for dividends, you’re not in a rush and can consider setting your buy limit orders at key psychological levels populated by Fibonacci retracements at the following levels:
146, 139, and 133.
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Undervalued Stock #4: Regeneron Pharmaceuticals (REGN)
The number4 on my undervalued Covid-19 vaccine-related stocks is Regeneron Pharmaceuticals (REGN). This company discovers, develops, and commercializes products that fight eye disease, cardiovascular disease, cancer, and inflammation. A couple of months ago the FDA granted Regeneron an emergency use Authorization for a COVID-19 treatment which got its stock bulls excited initially. But that excitement faded away with the vaccine promise because people wouldn’t need Regeneron’s COVID-19 treatment as much anymore. And this caused the stock price to drop. In fact, its stock price has been dropping since July 2020 after it reached an all-time high level of $661.
So why is this company on my list? What Regeneron may have going for it in the long run, is its ability to develop antibodies to treat pandemics or other diseases in the future. Also, let’s not forget that there’s half the population that’s against vaccines in general so a COVID-19 treatment is likely not gonna die down altogether. Regeneron stock doesn’t pay a dividend though. So a strategy revolving around this stock could either be value investing or swing trading.
Let’s now look at the chart. Notice that it has reached the 50% Fibonacci retracement level at 497. This is also right at the previous high from back in 2017.
We could see the bearish momentum slow down from here. But the next psychological levels that are still likely to be revisited are 458 and 406 respectively. If you buy at any of these levels, you can then consider taking a profit at 586 and 661 for a swing trade. Alternatively, you can hold long term depending on your views on the whole COVID-19 vaccine situation.
Speaking of which, what ARE your views on the whole COVID-19 vaccine situation? Yay or nay? I’d love to get to know you so let me know your views down below.
Undervalued Stock #3: GlaxoSmithKline (GSK)
The number 3 on the list is GlaxoSmithKline (GSK) which is one of the largest pharmaceutical companies by total sales.
A Covid-19 vaccine project supported by GlaxoSmithKline Plc is headed for advanced trials after showing a strong immune response in early studies.
So this one is directly related to the vaccine hype.
Bad news first. This stock has NOT been performing well at ALL since 1999. Its price has been mainly bouncing up and down. The reason why it’s even made it on our list is its very strong fundamentals. GSK has a 93 billion dollar market cap. It pays a whopping 5.41% dividend yield. But because the stock price is kinda cheap, this dividend yield only amounts to $2 per share per year.
The company has a wide economic moat, and strong operations. If you look at Glassdoor, you’d notice they’re hiring kinda aggressively which shows they are confident about their future growth.
Regardless, looking at the chart, this would be a stock that I would swing trade, instead of holding long term until we see a solid breakout above the key resistance level at $60.
As you can see, the GSK stock price has been bouncing between key Fibonacci levels at 29 and 56 for the past 2 decades and right now its price is at the median pivot point just below 38. So a strategy here is buying either at the current price or at the key support level of 29 and then take profit at the 56 resistance and in the meantime, collect a bunch of dividend payments if this takes over 3 months to take profit.
Undervalued Stock #3 [TIED]: Honeywell International (HON)
Now here at #3, I want to give you an alternative which is kinda in the opposite situation compared with GSK, and that is Honeywell International (HON) which is actually not a healthcare company. It’s an aerospace/ tech company.
There is growing evidence that COVID-19 can spread through the air. This is concerning as society tries to get back to normal and open schools, stores, and restaurants.
Honeywell has produced its Healthy Buildings solutions to help manage virus outbreaks within an enclosed space, as well as the famous N95 masks that half of America doesn’t like wearing but it helped boost Honeywell’s stock price to the roof after its first initial shock in March 2020.
Now with a Covid-19 vaccine on the way, the hype around these products might go away but their rapid response and shifting their product lines to adjust with current circumstances showed the company has very effective management, which in my eyes, is a sexy thing when it comes to ranking stocks. It even pays a 1.75% dividend yield and its earnings per share are healthy. So why is this ranked number 3 on my list and not number 1?
A few reasons. First off, I’m already invested heavily in tech stocks that have even better fundamentals that I share with our Premium Investing Group (PIG) members every single Tuesday.
But a more important reason is that its stock price is actually way overvalued right now, and heck, the opposite situation compared with GSK. Their final 2020 ex-dividend date was on November 12, so even if you’re gonna invest in this for dividend payments, you’re not really in a rush until the next payment and can afford to wait for its stock price to drop a bit before you tie the knot with the honey.
Looking at the chart, the key psychological levels you can set your buy limit order for the HON stock include 186, 171, and 158. If I were to add this to my portfolio, I would hold it long-term.
Undervalued Stock #2: Eli Lilly (LLY)
On this spot, we’ve got Eli Lilly (LLY) for its wide economic moat, fair dividend payment, and fair current market value
Eli Lilly has really strong fundamentals. It has a wide economic moat, positive earnings per share, has strong operations, high growth potential, and has historically outperformed the market. It even pays a fair dividend at a 1.99% yield. But fortunately for value investors, speculative investors have been dumping it since July 202 after it reached a new all-time high of $170 and its stock price has been struggling to get back up.
Looking at the chart, we notice one good news that it may have bottomed out at 131. It even broke above the Ichimoku cloud beginning of December, indicating a new bullish momentum heading our way.
Its earnings won’t be until January 29, 2021, so we could see more volatility between now and then. An investment strategy here could be buying some around the current market price and the 38% Fibonacci retracement level of 146, and setting buy limit orders to buy more if the price drops lower towards the next key psychological levels of 138 and 131 respectively. I kinda like Lilly’s mission and foundation principles so I’d be holding it long-term.
Undervalued Stocks #1 [TIED]: Merck (MRK) and Amgen
This article is about the top 5 Covid 19 Vaccine stocks that Are undervalued, so the top spot is reserved for two companies that check all the boxes that come to this type of filtering. And the spot is tied between two companies; Merck and Amgen.
Amgen is a leader in biotechnology-based human therapeutics, with historical expertise in renal disease and cancer supportive care products.
Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections, and some argue it owns one of the best drugs in the world, Keytruda.
End of November, Merck said it’s expanding its coronavirus work by buying a small biotech company and its COVID-19 drug.
Then beginning of December, it sold its equity stake in coronavirus vaccine maker, Moderna. The reason for this was mainly financial as Merck said it achieved a substantial gain on its direct holding in Moderna over the life of the investment and said Merck and Moderna continue to collaborate on the development of personalized cancer vaccines.
Amgen is one of the three companies in the COVID R&D Alliance, which was established in March 2020 to boost the COVID-19 study candidates. Beginning of December, the three companies launched a new clinical trial among hospitalized patients.
Both Amgen and Merck have a wide economic moat, strong operations, high growth potential, and have historically outperformed the market. Amgen pays a 2.79% dividend yield while Merck pays a 3.17% dividend yield.
And to make it on top of our list today, they are both currently undervalued.
Both of them appear to be on their way to recovery with Merck slightly more undervalued than Amgen but Amgen has momentum on its side for a faster recovery. Looking at the chart, Amgen appears to be in the process of forming a double bottom bullish reversal chart pattern but it stays below the Ichimoku cloud, so buy limit order ideas include the key Fibonacci retracement levels at 223, 214, and 199. You could consider taking profit at the all-time high level of 265 or hold on to it long term for future growth and dividend payments.
Merck has just broken above the Ichimoku cloud after struggling at the 50% Fibonacci retracement level of $79 for weeks. The current market price at around 80 isn’t a bad place to start considering its ex-dividend date is December 14th and for you to get paid this quarter, you’d want to buy it before that date.
The next buy limit order ideas are at 74 and 76 respectively. If you want to be conservative, you can consider taking profit at 87 or 91 but if you’re a Merck fan, then you can ride it out long term while earning the dividend payments.
There you have it! My top picks for undervalued stocks in healthcare, as well as the optimal prices you can set your buy limit orders at. If you haven’t already, make sure to secure your spot for my free training today to get my risk management toolkit too!
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