There is a force more powerful than the fear of missing something – the old fear itself. The shares of several small companies developing COVID-19 diagnostics, therapies and vaccines soared last year. It’s fair to say that most investors stood on the sidelines and didn’t buy these stocks. Why? The stocks were just too risky despite their breathtaking gains.
Few investors are keen on taking significant levels of risk, but there are still ways to profit from the expanding coronavirus market without losing sleep at night. Here are three great COVID-19 stocks to buy if you’re not a big risk taker.
1. Abbott Laboratories
Abbott Laboratories (NYSE: ABT) quickly last year to develop COVID-19 tests. The company is currently marketing eight COVID-19 tests under the United States Food and Drug Administration’s Emergency Use Authorization (EUA) program. In the third quarter of 2020, these tests generated $ 881 million worldwide.
The huge growth fueled by COVID-19 testing will undoubtedly subside, especially once the pandemic is over. However, Abbott is expected to maintain a thriving COVID-19 diagnostic business for a long time if the predictions are correct that COVID-19 will become like the seasonal flu.
More importantly, Abbott has several other growth drivers. Top of the list is FreeStyle Libre, the company’s popular continuous glucose monitoring (CGM) system. Abbott’s latest version of the CGM device is already available in Europe and could be its biggest winner, thanks to its small size and affordability.
Low-risk investors will appreciate that Abbott is as strong as they come. It occupies the No. 1 position in more than a dozen major markets. It is financially strong with solid earnings growth. The company is a Dividend Aristocrat with 49 consecutive years of dividend increases. Abbott has been ranked # 1 in its industry on Fortune’s Most Admired Companies list for seven consecutive years. With its solid reputation, excellent growth prospects and solid dividend, buying Abbott Labs shares is an easy call.
2. Johnson & Johnson
Investors who don’t take a lot of risk will certainly like Warren Buffett’s Two Rules of Investing. Rule # 1? Don’t waste any money. Rule n ° 2? Remember rule # 1. If you are looking for a stock of COVID-19 vaccines that will allow you to follow Buffett’s rules, you will probably go with Johnson & johnson (NYSE: JNJ).
J&J is expected to announce the results of an advanced stage study of its JNJ-78436735 coronavirus vaccine this month. If these results are positive, the business will automatically have a huge winner in its hands. Unlike other major COVID-19 vaccines, JNJ-78436735 only requires a single dose.
Due to its diversification into healthcare and its size, Johnson & Johnson’s fortunes, however, do not depend on what happens with their COVID-19 vaccine. The company operates three multi-billion dollar business lines focused on consumer health, medical devices and pharmaceuticals. When one of these units faces headwinds, the others are usually able to take over.
Like Abbott Labs, Johnson & Johnson is rock solid. It is the largest healthcare company in the world. J&J is not just a dividend aristocrat; it is also a King of dividends with an impressive record of 58 consecutive years of dividend increases. The stock might not generate the huge gains that small biotech stocks could make, but you shouldn’t have to worry about losing your money in the long run with Johnson & Johnson.
No company has played a bigger role in the coronavirus vaccine race so far than Pfizer (NYSE: PFE). Big drugmaker has teamed up with German biotechnology BioNTech at the beginning of last year. Their COVID-19 vaccine, Comirnaty (BNT162b2), became the first to win the EUA in the United States. It is likely to make the most money of all coronavirus vaccines in 2021.
Pfizer could realistically add $ 7 billion or more in revenue this year from Comirnaty’s sales. This product alone could increase the company’s total sales by at least 14%. Pfizer and BioNTech are also working on the development of an influenza vaccine based on the same messenger RNA technology used for Comirnaty.
Even without its successful COVID-19 vaccine, however, Pfizer is poised to generate solid growth in 2021 and for years to come. The company offers several products with rapidly increasing sales, including Vyndaqel, which treats a rare type of heart disease called transthyretin-mediated amyloidosis. Pfizer is no longer held back by older drugs that have lost their patent protection, like Lyrica, thanks to the split of its Upjohn unit and its merger with Mylan to form a new entity, Viatris.
Pfizer is, along with Abbott and J&J, another blue chip stock that investors can own without worrying about taking too much risk. It has been around since 1849 and has adapted to the continuous changes in the healthcare landscape. Pfizer also offers an attractive dividend which will increase its total return. This big pharmaceutical action could be a market beater over the next few years with its current strong lineup and promising pipeline.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.