In this article we will take a look at the 10 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.
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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.
5. 111, Inc. (NASDAQ: YI)
Number of Hedge Fund Holders: 5
111, Inc. (NASDAQ: YI) is a China-based firm that markets a healthcare platform which sells health and wellness products through digital retail, wholesale and pharmacies. It also provides online consultation services and e-prescription services to consumers, even on mobile platforms. The firm deals in drugs, nutritional supplements, contact lenses; medical supplies and devices, including bandages and thermometers; and personal care products. It is placed fifth on our list of 10 cheap pharmaceutical stocks for 2021.
The market cap of the firm is over $900 million and it posted an annual revenue of more than $1.26 billion in December 2020, an increase of more than 50% compared to the previous year. The 52-week share price range of the firm is $45-$5 and earlier today, shares were trading for as low as $11. In March, the company announced that it was partnering with another pharma firm to develop an online chronic disease management platform for the hepatobiliary disease market in China. It also operates an online marketplace for third-party drug sellers.
Totem Point Management currently owns 562,788 shares of YI, worth $3.9 million. 111 Inc. occupies 1.62% of Totem Point’s overall equity.
4. Clever Leaves Holdings Inc. (NASDAQ: CLVR)
Number of Hedge Fund Holders: 9
Clever Leaves Holdings Inc. (NASDAQ: CLVR) is a New York-based company that cultivates, extracts, manufactures, and commercializes pharmaceutical-grade cannabinoid products. It has operations in Colombia, Portugal, Germany, the United States, and Canada. The firm also makes and sells natural remedies and dietary supplements. These products are sold to mass retailers, health stores and independent distributors. Clever is placed fourth on our list of 10 cheap pharmaceutical stocks to buy for 2021.
The market cap of the firm is close to $300 million and it posted an annual revenue of more than $12 million in December 2020. The 52-week price range of company stock is $19.4-$8. Earlier today, the shares were being traded at $11.4. In March, the company announced a deal with another European pharma firm for the sale of medical cannabis extracts that are produced by the New York firm. Clever said it would develop the product in accordance with European regulations exclusively for the new partner.
Our database shows that 9 hedge funds held stakes in CLVR as of the end of the fourth quarter, versus 10 funds in the third quarter.
3. Evolus, Inc. (NASDAQ: EOLS)
Number of Hedge Fund Holders: 10
Evolus, Inc. (NASDAQ: EOLS) is a California-based firm that deals in medical aesthetic products for physicians and their patients. The products of the firm include Jeuveau, a proprietary 900 kilodalton purified botulinum toxin type A formulation for the temporary improvement in the appearance of moderate to severe glabellar lines in adults. The firm also offers regulatory management services. It was founded in 2012 and is placed third on our list of 10 cheap pharmaceutical stocks for 2021.
The market cap of the company is over $500 million and it posted a revenue of more than $20 million in the fourth quarter of 2020, up almost $13 million to the preceding quarter. The 52-week share price range of the firm is $17.3-$2.8. Earlier today, the shares were trading at $11.2. In March, the company announced that it had reached an open market sales agreement with SVB Leerink for $75 million worth of common stock. North Carolina-based Truist International had earlier downgraded Evolus rating from a Buy to Hold after an IP settlement by the firm.
AWH Capital currently holds 174,500 shares of EOLS that amounts $586,000. EOLS occupies 0.58% of AWH Capital’s total portfolio.
2. Teva Pharmaceutical Industries Limited (NYSE: TEVA)
Number of Hedge Fund Holders: 26
Teva Pharmaceutical Industries Limited (NYSE: TEVA) is an Israel-based company that focuses on the development and production of generic drugs. It also has stakes in active pharmaceutical ingredients and proprietary pharmaceuticals. The company markets sterile products, hormones, high-potency drugs, and cytotoxic substances in various dosage forms, including tablets, capsules, injectables, inhalants, liquids, ointments, and creams. It is placed second on our list of 10 cheap pharmaceutical stocks for 2021.
The company has a market cap of over $11 billion and posted an annual revenue of more than $16.5 billion in December 2020, down slightly to the $16.8 billion revenue posted the previous year. The 52-week share price range of the company is $13-$8. Earlier today, the shares of the company were trading at $10.8. Earlier this month, the European Union authorized Seffalair and BroPair Spiromax, two drugs developed by Teva, for the treatment of asthma patients. Initial launch of the new products are planned in Portugal, Spain, and the United Kingdom.
With a $412.9 million stake in TEVA, Warren Buffett’s Berkshire Hathaway owns 42.7 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 26 hedge funds held stakes in TEVA as of the end of the fourth quarter, versus 33 funds in the third quarter.
In one of their investor letters, Miller Value Partners highlighted a few stocks and Teva Pharmaceutical Industries Ltd (NYSE:TEVA) is one of them. Here is what Miller Value Partners said:
“Teva Pharmaceuticals (TEVA) declined 26.9% during the quarter as the market continues to be concerned on opioid liabilities as well as price fixing lawsuits. The company report 2Q results with total revenue of $3.87B below consensus of $4.024B, but reiterated 2020 company guidance of $16.6-17B (consensus of $17.041B). The company reported 2Q Adjusted EBITDA of $1.108B versus $1.099B expected and reiterated 2020 Adjusted EBITDA of $4.5-4.9B ($4.637B consensus) and adjusted EPS of $2.30-2.55 ($2.53 consensus) and Free Cash Flow of $1.8-2.2B. The company was hit after the US Department of Justice alleged in a lawsuit that TEVA provided illegal copays from 2006-2015 on a drug to treat MS. The allegation is $300mm of false claims which TEVA would be liable for 3x that in potential damages if they were to lose in court.”
1. Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD)
Number of Hedge Fund Holders: 26
Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD) is a Boston-based firm that concentrates on the development and commercialization of gastrointestinal (GI) products. The products that the company offers include linaclotide, a guanylate cyclase type-C agonist for the treatment of adults suffering from irritable bowel syndrome. The firm is also rumored to be developing IW-3300, a GC-C agonist, which is in pre-clinical development for the treatment of visceral pain conditions. The company was founded in 1998 and is placed first on our list of 10 best pharmaceutical stocks for 2021.
It has a market cap of more than $1.6 billion and posted an annual revenue of more than $380 million in December 2020, down from the $428 million posted the previous year. The 52-week share price range of the firm is $12.5-$8.6. Earlier today, the shares of Ironwood were trading at $10.8. In February, the company announced that CEO Mark Mallon would be stepping down from his role. Shares of the company had soared earlier this year as it posted quarterly earnings that had beaten Wall Street estimates.
As of the end of the fourth quarter, there were 26 hedge funds in Insider Monkey’s database that held stakes in IRWD, compared to 24 funds in the third quarter. Sarissa Capital Management, with 14.04 million shares of IRWD, is the biggest stakeholder in the company.
You can also take a peek at 10 Best Biotech Stocks To Buy For 2021, and Top 10 Best Freelancing Platforms and Websites for 2021.
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Disclosure: None. 10 Cheap Pharmaceutical Stocks For 2021 is originally published on Insider Monkey.
