In this article we will take a look at the 10 cheap pharmaceutical stocks for 2021. You can skip our comprehensive analysis of the pharma industry and go directly to the 5 Cheap Pharmaceutical Stocks For 2021.
Pharmaceutical companies have been in the spotlight for the best part of the last twelve months as they race to develop and produce vaccines to battle the deadly coronavirus that has claimed the lives of millions across the world. In the first three quarters of 2020, the focus of the pharma firms was on vaccine development. In the last three months, as the developed vaccines passed clinical trials, it shifted towards production. According to a report by news agency Reuters, Moderna, Inc. (NASDAQ: MRNA) has plans to produce more than 30 million vaccines a month.
However, it is still unclear if the vaccines currently in the market will be a one-off shot or require multiple doses. In either case, billions of more COVID-19 vaccines might be needed to protect the world population against the virus. Even as firms like Pfizer Inc. (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ) race to increase output, some pharma giants are turning towards smaller pharmaceuticals for help in this regard. Stocks of these smaller pharma firms have been surging on the back of these new developments.
The past year has seen the dramatic rise of small pharma companies in the United States, Russia, China, and even India. For example, in the US, Moderna was just a cheap pharma stock until a few months ago with never having turned a profit in the eleven years since it was established and employing less than 900 people before the pandemic. The development of the vaccine, however, has propelled it to a value of over $60 billion, making it one of the largest drug companies in the world in terms of market capitalization.
Growth Catalysts for Pharma Stocks
Apart from possible vaccine development and production contracts, there are other factors that bode well for the long-term future of small pharma companies. It is likely that the focus of big drugmakers will remain on the coronavirus for the foreseeable future and this provides smaller firms with the opportunity to focus on drug development of other viruses, diseases and ailments. Drugs for chronic conditions like high blood pressure, cases of which have increased manifold since the pandemic, and diseases like cancer, are still in high demand.
The increase in the average lifespan of humans has also created ageing populations around the world, most of whom require prescription medicines. It is quite evident that the pharma industry offers returns to investors no matter what the economic conditions may be, as the previous year has highlighted. This results in stable profits for drugmakers and regular dividends for investors. Even though big companies get all the attention, there are some smaller firms that can bring higher rewards for those who are willing to take the risk.
It is, however, prudent to invest in cheap pharma stocks that have growth potential. The rise of meme stocks has resulted in market volatility that has clobbered entire investment portfolios in the past few years. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of 10 cheap pharmaceutical stocks for 2021.
10. MedAvail Holdings, Inc (NASDAQ: MDVL)
Number of Hedge Fund Holders: 8
MedAvail Holdings, Inc (NASDAQ: MDVL) is a New Jersey-based healthcare firm that markets new technology which automates pharmaceutical services in clinics and other healthcare centers through a robotics platform called the MedAvail MedCenter. The firm also provides telehealth consultations through a service called SpotRx and home delivery of drugs. MedAvail Holdings has plans to expand presence across the US in the coming years. The company is placed tenth on our list of 10 cheap pharmaceutical stocks for 2021.
It has a market cap of over $419 million and posted an annual revenue of more than $13 million in December 2020, an increase of more than $10 million compared to 2019. The drugmaker attributes the increase in revenue to favorable market conditions. The 52-week share price range of MedAvail stock is $46-$9. Earlier this week, the company announced that a healthcare provider in Texas had expanded an agreement with the firm and deployed the MedAvail MedCenter at 16 emergency care sites in the state.
As of the end of the fourth quarter, 8 hedge funds in Insider Monkey’s database of 887 funds held stakes in MDVL, compared to 1 fund in the third quarter.
9. Aphria Inc. (NASDAQ: APHA)
Number of Hedge Fund Holders: 12
Aphria Inc. (NASDAQ: APHA) is a Canada-based firm involved in the international production and distribution of medicinal and recreational cannabis. The firm has retail and wholesale operations across the world. The 52-week share price range of Aphria is $32-$2.7. The company has had a very strong start to the new year and share price has been soaring since the economy was reopened following the vaccine rollout. It is placed ninth on our list of 10 cheap pharmaceutical stocks for 2021.
It has a market cap of more than $4.5 billion. In May 2020, the company posted an annual revenue of almost $400 million, an increase of more than 200 million over the previous year. The revenues reflect that the firm’s expansion into other North American countries has helped it grow. Earlier this week, Aphria announced that it was merging with rival Tilray. Aphria CEO said on the occasion that the business combination would create a firm with a strong financial profile that would lead the market in cannabis production and distribution.
According to our database, the number of APHA’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 12 hedge funds that hold a position in Aphria Inc. compared to 8 funds in the third quarter. The biggest stakeholder of the company is Two Sigma Advisors, with 1.8 million shares, worth $10.9 million.
8. Amryt Pharma plc (NASDAQ: AMYT)
Number of Hedge Fund Holders: 8
Amryt Pharma plc (NASDAQ: AMYT) is a United Kingdom-based firm that concentrates on the development and delivery of new drugs to help the patients with rare and orphan diseases. The company has a growing commercial business and invests heavily in research and development. The company makes Lomitapide for the treatment of homozygous familial hypercholesterolemia; and Metreleptin for the treatment of generalized and partial lipodystrophy. It has operations in the Americas, Europe, and the Middle East. The firm was founded in 2015.
It has a market cap of more than $506 million and posted a revenue of more than $182 million in December 2020, an increase of more than $130 million compared to the previous year. The 52-week share price range of the company stock is $15-$10. Earlier today, it was trading at $13.8. Last year, the company confirmed that its research into a genetic skin disorder had got encouraging results. A request for production of the new treatment will be filed this year. The firm is placed eighth on our list of 10 cheap pharmaceutical stocks for 2021.
The company is also getting the attention of the smart money, as 8 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 4 funds a quarter earlier.
7. Viatris Inc. (NASDAQ: VTRS)
Number of Hedge Fund Holders: 67
Viatris Inc. (NASDAQ: VTRS) is a Pennsylvania-based pharma firm that develops, licenses, manufactures, markets, and distributes drugs, complex generics, biosimilars, and active pharmaceutical ingredients globally. The drugs made by the company treat infectious diseases like HIV/AIDS and the medicines produced include Wixela, Inhub, ADVAIR DISKUS, glatiramer acetate injection, Copaxone, and others. Viatris was founded in 1961 and is placed seventh on our list of 10 cheap pharmaceutical stocks for 2021.
It has a market cap of over $15.9 billion and posted an annual revenue of close to $12 billion in December 2020, an increase of more than $50 million compared to the previous year. The 52-week share price range of the firm is $19-$12. In March, the company said it was seeking regulatory approval for a new drug for patients of asthma. However, the company said it was not including the potential revenue from the new product into its financial estimates for the year.
There were 67 hedge funds that hold a position in Viatris Inc. compared to 48 funds in the third quarter.
6. Neoleukin Therapeutics, Inc. (NASDAQ: NLTX)
Number of Hedge Fund Holders: 15
Neoleukin Therapeutics, Inc. (NASDAQ: NLTX) is a Washington-based company that focuses on advanced computational methods to build new therapeutic proteins for the treatment of serious immunological disorders, including cancer and autoimmunity. The firm is working on NL-201, a new protein designed to mimic the therapeutic activity of the cytokines interleukin (IL)-2/IL-15 for the treatment of different types of cancer. It is placed sixth on our list of 10 cheap pharmaceutical stocks for 2021.
It has a market cap of more than $500 million. The 52-week share price range of the firm is $18.1-$9.6. In January, the share price of the stock plunged after the regulatory authorities asked the company to halt clinical trials for a new drug. The authorities asked the firm to further refine techniques related to the measurement of proteins being used in the drug so that the dosage required to treat trial patients could be administered without any unforeseen problems.
A total of 15 hedge funds tracked by Insider Monkey were bullish NLTX at the end of the fourth quarter, down from 19 funds a quarter earlier.
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Disclosure: None. 10 Cheap Pharmaceutical Stocks For 2021 is originally published on Insider Monkey.