10 Best COVID Stocks To Buy Now

Published on September 30, 2022 at 9:00 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 10 best COVID stocks to buy now. If you want to see more stocks in this selection, check out 5 Best COVID Stocks To Buy Now.

In 2020, the COVID-19 pandemic was the primary driver of global uncertainty, making headlines around the world. The virus took a backseat only recently, as the Russian war in Ukraine and the new trade uncertainty associated with Western sanctions on Russia captured the interest of mainstream media. During the peak COVID years, the scale of infection, hospitalization rates, and death toll exceeded all major outbreaks in the last century.

The global lockdown led to mass disruption throughout global production, supply chains, and trade channels. Economies around the world reported a nosedive in growth and rising unemployment in 2020. After nearly two years of intermittent lockdowns and borders remaining shut across the world, the COVID-19 pandemic is said to have wiped out $8.5 trillion in global output over that period, far exceeding the damage caused during the 2008 financial crisis. To deal with the rampant unemployment and financial insecurity, the US Federal Reserve acted quickly and reduced interest rates, while employing quantitative easing strategies to inject new money into the economy.

In early March 2020, the US Congress passed a $1.9 trillion stimulus package, which included direct payments to citizens, a notable elevation in unemployment benefits, and cash injections for local governments, small businesses, healthcare facilities, and schools to navigate the crisis. Governments around the world opted for equally intense stimulus measures to ease the economic impact of the pandemic.

While stock markets around the world crashed on the back of low demand, supply disruptions, and overall uncertainty, healthcare, logistics, and consumer defensive firms thrived. Some of the best COVID stocks to buy now include Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Amazon.com, Inc. (NASDAQ:AMZN).

Photo by Spencer Davis on Unsplash

Our Methodology

We selected the stocks which gained prominence in the pandemic years. The pharma companies in this list are also working on treatments of new COVID variants and new viruses. The other, non-pharma companies in this list are set to continue their growth momentum they picked after the pandemic. These include e-learning, digital healthcare, vaccines, online entertainment, and e-commerce stocks. Positive analyst ratings, strong hedge fund sentiment, and future growth potential were classifiers for selecting the following stocks.

We have arranged the list according to the hedge fund sentiment around the securities, which was assessed from Insider Monkey’s Q2 2022 database of about 900 elite hedge funds.

Best COVID Stocks To Buy Now

10. 2U, Inc. (NASDAQ:TWOU)

Number of Hedge Fund Holders: 15

2U, Inc. (NASDAQ:TWOU) is a Maryland-based education technology company operating in the United States and internationally. The company runs via two segments – Degree Program and Alternative Credential. Online learning was very popular during the pandemic years, which makes 2U, Inc. (NASDAQ:TWOU) one of the best COVID stocks to buy now.

On August 26, Citi analyst Thomas Singlehurst maintained a Buy recommendation on 2U, Inc. (NASDAQ:TWOU) but lowered the price target on the shares to $19 from $40. The company’s shift towards profit and cash flow is faced with some execution risk, but it makes sense in terms of a “fairly constrained balance sheet and limited appetite from equity investors to give the group the ‘benefit of the doubt’ with respect to future top-line growth,” the analyst told investors in a research note.

According to Insider Monkey’s data, 15 hedge funds held stakes worth $192 million in 2U, Inc. (NASDAQ:TWOU) at the end of the second quarter of 2022, compared to 21 funds in the prior quarter worth $243 million. Cathie Wood’s ARK Investment Management is the leading position holder in the company, with 9.6 million shares valued at $89.3 million.

In addition to Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Amazon.com, Inc. (NASDAQ:AMZN), 2U, Inc. (NASDAQ:TWOU) is one of the stocks which gained a lot of recognition in peak COVID years.

Here is what ClearBridge Investments Small Cap Strategy has to say about 2U, Inc. (NASDAQ:TWOU) in its Q4 2021 investor letter:

“The lingering pandemic continues to cause volatility across sectors. Among detractors for the quarter, after online education tech company 2U received a boost from the move to online education at the outset of the COVID-19 pandemic, attention has now turned to a tight labor market that has historically led to softer enrollments. Although 2U exceeded third-quarter expectations and closed on its acquisition of edX in the fourth quarter, weak results from educational services provider Chegg seemingly confirmed the market’s enrollment concerns and weighed on 2U. Nevertheless, we continue to believe the long-term prospects for 2U are much brighter than are embedded in the stock today.”

9. Stride, Inc. (NYSE:LRN)

Number of Hedge Fund Holders: 23

Stride, Inc. (NYSE:LRN) is a technology-led education services company based in Reston, Virginia. The company offers proprietary and third-party digital curriculum, software systems, and educational services for students from kindergarten through 12th grade in the United States and internationally. Online education services boomed amid COVID lockdowns, and companies like Stride, Inc. (NYSE:LRN) thrived during the pandemic years. In FQ4, the company saw revenue growth of 14.5%, adjusted operating income growth of 59.8%, and net income growth of approximately 168%. It remains one of the best COVID stocks.

Morgan Stanley analyst Greg Parrish on August 25 upgraded Stride, Inc. (NYSE:LRN) to Overweight from Equal Weight with an unchanged price target of $45. The analyst sees an attractive risk/reward after the FQ4 earnings pullback and believes the market is under-appreciating Stride, Inc. (NYSE:LRN)’s growth story. The stock is presently trading in-line with its 10-year average multiple despite a “fundamental change” in its growth path due to its Career Learning division, noted the analyst.

Among the hedge funds tracked by Insider Monkey, 23 funds were bullish on Stride, Inc. (NYSE:LRN) at the end of June 2022, compared to 26 funds in the last quarter. The collective stakes in Q2 increased to $1.98 billion from $1.8 billion in the earlier quarter.

In its Q4 2020 Investor Letter, Wasatch Micro Cap Value Fund highlighted a few stocks and Stride, Inc. (NYSE:LRN) was one of them. Here is what the fund said:

“The largest detractor from Fund performance for the fourth quarter was Stride, Inc. (LRN), formerly known as K12, Inc. This technology-based education company offers proprietary curriculum, software and services created for online delivery to students in kindergarten through 12th grade. The stock declined despite reasonably strong enrollment. In hindsight, we underestimated investor concerns that there’ll be considerably lower demand for the company’s services as the economy reopens more fully. Nevertheless, we believe those concerns may be overblown and it’s possible the pandemic has changed parents’ and students’ mindsets toward online education. Therefore, we think annual growth—even after the pandemic ends—could be at double-digit rates. This is because the industry itself and Stride’s market share both have plenty of room to expand. Moreover, any reluctance to give Stride a try could be reduced because the company’s fees are paid by schools, not by parents. And Stride is expanding by also offering at-home services that are integrated with school-based education.”

8. Upwork Inc. (NASDAQ:UPWK)

Number of Hedge Fund Holders: 25

Upwork Inc. (NASDAQ:UPWK) was incorporated in 2013 and is headquartered in San Francisco, California. The company operates an online marketplace that connects businesses with independent professionals and agencies around the world. Upwork Inc. (NASDAQ:UPWK) continues to expect Q3 revenue between $156 million and $158 million, versus a consensus of $157.34 million. The company experienced excessive traffic on its platform during pandemic years, and that momentum has continued after peak COVID time. Upwork Inc. (NASDAQ:UPWK) is positioned advantageously in a growing market with solid tailwinds, and management has also been successful in elevating revenues.

On September 23, BTIG analyst Marvin Fong reiterated a Buy rating on Upwork Inc. (NASDAQ:UPWK) but lowered the price target on the shares to $24 from $30. The analyst cited the company’s “unexpected” CFO transition and the management affirming only Q3 but not FY22 guidance for the trimmed price target.

According to Insider Monkey’s Q2 data, 25 hedge funds were long Upwork Inc. (NASDAQ:UPWK), compared to 26 funds in the last quarter. David Brown’s Hawk Ridge Management is the largest stakeholder of the company, with 3.35 million shares worth $69.4 million.

7. BioNTech SE (NASDAQ:BNTX)

Number of Hedge Fund Holders: 26

BioNTech SE (NASDAQ:BNTX) is a German biotechnology company that develops and commercializes immunotherapies for cancer and other infectious diseases. The company also created a prophylactic vaccine for COVID-19. On September 26, BioNTech SE (NASDAQ:BNTX) announced that it had received FDA Emergency Use Authorization for its Omicron-adapted booster vaccine targeted at children aged 5 to 11 years. BioNTech SE (NASDAQ:BNTX) profited significantly from the sales of COVID-19 vaccines, experiencing a revenue growth of 3834.4% between 2020 to 2021.

On August 17, Cowen analyst Yaron Werber initiated coverage of BioNTech SE (NASDAQ:BNTX) with a Market Perform rating and a $177 price target. The company’s Comirnaty will potentially retain its 60% share of the COVID-19 vaccine market, the analyst told investors. The company’s “deep” oncology pipeline is innovative “but requires validation and is still early in development,” added the analyst.

Among the hedge funds tracked by Insider Monkey, Philippe Laffont’s Coatue Management is one of the leading stakeholders of BioNTech SE (NASDAQ:BNTX), with 421,590 shares worth about $63 million. Overall, 26 hedge funds were bullish on the stock at the end of June 2022, compared to 29 funds in the earlier quarter.

Here is what Baron Funds has to say about BioNTech SE (NASDAQ:BNTX) in its Q3 2021 investor letter:

“BioNTech SE is a leader in the emerging field of mRNA drugs, with additional programs in engineered cell therapies, antibodies, and immunomodulators. Shares performed well for the quarter. The COVID-19 vaccine rollout continues with the addition of a booster shot, and we believe the pandemic has been a strong proof point of the speed and efficacy of the mRNA platform. Beyond vaccines, we think BioNTech has potential to disrupt the biopharmaceutical space with a pipeline spanning oncology, infectious diseases, and rare diseases.”

6. Sanofi (NASDAQ:SNY)

Number of Hedge Fund Holders: 28

Sanofi (NASDAQ:SNY) is a French biopharmaceutical company that operates through Pharmaceuticals, Vaccines, and Consumer Healthcare segments. Sanofi (NASDAQ:SNY) has a collaboration agreement with GSK plc (NYSE:GSK) to develop a recombinant COVID-19 vaccine. The company estimates a currency impact on Q3 2022 sales of about +10% to +11% and of +12% to +13% on Q3 EPS.

On September 15, Credit Suisse analyst Dominic Lunn maintained an Outperform rating on Sanofi (NASDAQ:SNY) but lowered the price target on the shares to EUR 106 from EUR 110.

According to Insider Monkey’s Q2 data, 28 hedge funds reported owning stakes worth $1.68 billion in Sanofi (NASDAQ:SNY), up from 19 funds in the earlier quarter worth $1.5 billion. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 17.6 million shares valued at $881 million.

Like Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Amazon.com, Inc. (NASDAQ:AMZN), Sanofi (NASDAQ:SNY) is one of the best COVID stocks to buy now.

Here is what Dodge & Cox Funds has to say about Sanofi (NASDAQ:SNY) in its Q3 2021 investor letter:

“Sanofi (3.5% position) is a diversified, global pharmaceuticals company with leading positions in vaccines, consumer health products, rare diseases, and emerging markets. Despite a favorable business mix, Sanofi has underperformed its peers in new product development, commercial execution, and profit growth. A new management team, recruited in 2018-19, has made progress turning the company around. Its drug pipeline is improving, targets for higher margins are being met, and earnings per share are growing. Sanofi also pays a 4% dividend yield, maintains a strong balance sheet, and has relatively low exposure to potential pressures from U.S. drug pricing.”

Click to continue reading and see 5 Best COVID Stocks To Buy Now.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

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Click to continue reading…

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