The S&P 500 rose to a record high earlier this year, confirming its presence in a bull market, and has continued to rise, reaching new highs in recent weeks. Technology stocks, especially those in the artificial intelligence (AI) space, have led the gains, but companies in other areas have also benefited from this market optimism – especially those that have reported solid profits recently.
A great way to profit during the bull market is to get into these stocks that have momentum, but it’s also important to think beyond the bull market. Will these companies maintain their strength in the long run? If so, they could make excellent signings today. And along with these players, it’s also a good idea to pick up some stocks that may still be in the doldrums but could have a promising future. Together, these stocks can set you up for a win in the bull market and beyond.
You will find many of these stocks in the biotech and pharmaceutical sectors. Let’s take a look at three in particular that are waiting to rise.
1. Novavax
Novavax (NASDAQ: NVAX) has actually started on the path to profits and is up over 200% this year. But the key to putting this surge into perspective: The stock price had fallen to an extreme low after the coronavirus vaccine company reported lower-than-expected vaccine sales — and even cast doubt on its ability to continue operations.
However, things have changed for Novavax thanks to a partnership with Sanofi. The French pharmaceutical company is a vaccine specialist and has signed a deal that includes the co-commercialization of Novavax’s coronavirus vaccine from next year. The deal provides Novavax with $500 million upfront, as well as other payments that could total $700 million.
The Sanofi partnership removes much of the risk associated with Novavax stock and should help the company continue down the path toward developing a potentially winning product: a combination flu/coronavirus vaccine. Novavax’s candidate has already achieved positive results from its Phase 2 trial and the company is targeting commercialization in 2026.
If this program continues to move smoothly and sales of Novavax’s Covid vaccines strengthen this coming vaccine season, the shares could rise significantly from here.
2. Pfizer
Pfizer (NYSE:PFE) has also suffered from declining demand for coronavirus vaccination. The company is a leader in this market and its vaccine once helped it surpass $100 billion in annual sales. Today, however, Pfizer is cutting costs to better align its spending with revenue opportunities. In the short term, the cost savings, which result in expenses such as severance payments, can weigh on profits.
In addition, some of Pfizer’s biggest drugs are facing a loss of exclusivity, which could mean about $17 billion in lost revenue over the next few years. But Pfizer’s cost realignment plan and focus on its new drugs and programs – including the acquisition of oncology specialist Seagen – should pay off in the long run. Pfizer expects its drug launches in the first half of this year to generate $20 billion in revenue by 2030, and revenue from corporate deals to generate $25 billion.
Pfizer’s efforts in oncology look promising, with oncology product sales up 19% in the most recent quarter. And Pfizer has set a goal of expanding the number of successful oncology drugs from five today to more than eight by 2030.
All of this could lead to big gains for Pfizer stock, making them a great buy at a 12x forward earnings estimate.
3. Ginkgo Bioworks
Ginkgo Biowerk (NYSE: DNA) is a cell technology company serving a wide range of industries from drugmakers to agriculture and materials. Through its foundry, the company programs cells at scale, using automation, software and other tools, helping customers accelerate and generally improve the development of their products.
In the most recent quarter, the company’s new cell engineering programs rose 31%, and current active programs rose 41% to 140. The company also has a biosafety business – revenue there has been unstable, but Ginkgo wants to transform this unit into a recurring revenue activity by focusing on biosafety infrastructure development.
Shares of Ginkgo have fallen significantly since the company’s 2021 IPO, but for an investor who can handle some risk, it’s worth picking up a few shares now. Demand for Ginkgo’s foundry services is high, the company recently launched a cost-cutting program to reach adjusted EBITDA breakeven by the end of 2026 – and Ginkgo has more than $800 million in cash and no bank debt.
So if things continue from here, Ginkgo’s once-struggling stock could rise further.
Should you invest $1,000 in Novavax now?
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool has a disclosure policy.
Bull Market and Beyond: 3 Stocks Just Waiting to Soar was originally published by The Motley Fool
