In this article, we discuss 5 best COVID stocks to buy now. If you want to see more stocks in this selection, check out 10 Best COVID Stocks To Buy Now.
5. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 32
Teladoc Health, Inc. (NYSE:TDOC) is a New York-based virtual healthcare company operating in the United States and internationally. The company offers a portfolio of online services and solutions covering non-urgent, episodic, chronic, and complicated medical conditions. Although Teladoc Health, Inc. (NYSE:TDOC) stock has crashed more than 90% from its highs, its total addressable market is growing and the valuation is more reasonable. Teladoc Health, Inc. (NYSE:TDOC) also stands to gain now that Amazon.com, Inc. (NASDAQ:AMZN) announced plans to close its Amazon Care telehealth business by the end of this year. It remains one of the best COVID stocks to buy now.
On September 29, RBC Capital analyst Sean Dodge reiterated an Outperform rating on Teladoc Health, Inc. (NYSE:TDOC) but lowered the price target on the stock to $35 from $53. While the analyst remains positive on Teladoc Health, Inc. (NYSE:TDOC) stock, he urged some short-term caution into Q3 results given higher risk to guidance on the back of ongoing deterioration in the BetterHelp consumer outlook. The stock is trading at under 2-times expected FY23 sales, and he also sees most of the negative factors being “likely priced in”.
Cathie Wood’s ARK Investment Management is the largest Teladoc Health, Inc. (NYSE:TDOC) stakeholder, with 20.2 million shares worth approximately $692 million. Overall, 32 hedge funds were bullish on Teladoc Health, Inc. (NYSE:TDOC) at the end of Q2 2022, compared to 36 funds in the preceding quarter.
Here is what Greenhaven Road Capital has to say about Teladoc Health, Inc. (NYSE:TDOC) in its Q1 2022 investor letter:
“Teladoc is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).
Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch, a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc.”
4. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 45
Moderna, Inc. (NASDAQ:MRNA) is a Massachusetts-based biotechnology company which made headlines during the prime COVID years as its vaccine was one of the four approved by WHO. Apart from its respiratory COVID-19 vaccine, Moderna, Inc. (NASDAQ:MRNA) develops messenger RNA therapeutics and vaccines for the treatment of infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases. On September 28, The European Medicines Agency accepted Moderna, Inc. (NASDAQ:MRNA)’s application for conditional marketing authorization of a COVID booster vaccine for candidates 12 years and older.
Argus analyst Jasper Hellweg on September 14 maintained a Buy recommendation on Moderna, Inc. (NASDAQ:MRNA) but lowered the price target on the shares to $150 from $180. The analyst contended that the stock’s discounted price offers a “buying opportunity” as Moderna, Inc. (NASDAQ:MRNA)’s Omicron-containing bivalent COVID-19 booster vaccine was recently authorized by the FDA in the United States.
According to Insider Monkey’s data, 45 hedge funds were bullish on Moderna, Inc. (NASDAQ:MRNA) at the end of Q2 2022, up from 41 funds in the earlier quarter. Patrick Degorce’s Theleme Partners is the leading position holder in the company, with 6.35 million shares worth $907.7 million.
In its Q3 2021 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and Moderna, Inc. (NASDAQ:MRNA) was one of them. Here is what the fund said:
“Moderna, Inc. (NASDAQ:MRNA) is a biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines. The stock proved to be an impressive contributor once again in the quarter, as investors continue to evaluate the potential for future growth driven primarily by the firm’s revolutionary COVID-19 vaccine. Strong global demand for the vaccine may persist for the foreseeable future in order to maintain immunity as well as provide protection against any additional future variants. The potential for the firm’s mRNA technology to be used in a number of other use cases, specifically influenza, could also provide an additional tailwind for future growth.”
3. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 70
Pfizer Inc. (NYSE:PFE) is a New York-based biopharmaceutical company that was one of the biggest winners of the COVID-19 pandemic, as its COVID vaccines were universally approved. On September 27, Pfizer Inc. (NYSE:PFE) announced that its acquisition of Biohaven Pharmaceutical Holding Company Ltd. (BHVN) for approximately $11.6 billion will conclude on October 3. Biohaven markets the migraine drug Nurtec ODT, which accumulated a Q1 2022 net revenue of $123.6 million.
On August 1, investment advisory Barclays raised the price target on Pfizer Inc. (NYSE:PFE) to $52 from $50 and maintained an Equal Weight rating on the shares. Analyst Carter Gould issued the ratings update.
According to Insider Monkey’s Q2 data, 70 hedge funds were long Pfizer Inc. (NYSE:PFE), compared to 79 funds in the last quarter. Cliff Asness’ AQR Capital Management is the biggest stakeholder of the company, with 10.5 million shares worth about $554 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when Pfizer Inc. (NYSE:PFE) vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer Inc. (NYSE:PFE) had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.”
2. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 95
During COVID lockdowns, Netflix, Inc. (NASDAQ:NFLX) gained a lot of traffic and new accounts, as people had no alternative source of entertainment. Netflix, Inc. (NASDAQ:NFLX) is one of the best COVID stocks to buy now. On September 27, Netflix, Inc. (NASDAQ:NFLX) announced that it is launching an internal game studio in Finland in an effort to boost its gaming ambitions.
On September 28, Atlantic Equities analyst Hamilton Faber upgraded Netflix, Inc. (NASDAQ:NFLX) to Overweight from Neutral with a price target of $283, up from $211. The upcoming ad-supported service launch “could be extremely material” and its benefit hasn’t been reflected in consensus estimates, the analyst told investors in a research note. The analyst thinks Netflix, Inc. (NASDAQ:NFLX) could drive average revenue per user of $26 per month from advertising, more than three times the level of Disney’s Hulu.
Among the hedge funds tracked by Insider Monkey, Boykin Curry’s Eagle Capital Management is a notable position holder in Netflix, Inc. (NASDAQ:NFLX), with approximately 5.5 million shares worth $961.4 million. Overall, Netflix, Inc. (NASDAQ:NFLX) was part of 95 hedge fund portfolios at the end of June 2022.
Here is what Artisan Partners specifically said about Netflix, Inc. (NASDAQ:NFLX) in its Q2 2022 investor letter:
“Netflix, Inc. (NASDAQ:NFLX) was the weakest among the group, down 53%. We initiated our position in Netflix in Q1 after shares fell by more than half due to concerns about subscriber growth and increasing competition from streaming upstarts. The stock then suffered a second down leg in April after the company reported subscriber losses for the first time in its history. As we write this letter in July, the company reported its second consecutive quarter of subscriber losses, but the nearly 1 million subscribers lost were much lower than the 2 million that management had forecast, and shares rallied on the news. For patient investors, there is reason for optimism that subscriber growth will turn around. The company has plans to crack down on password sharing and is launching a lower cost advertising supported tier in 2023. Our investment case is focused on an undemanding valuation, massive scale, a continued shift in time and attention from linear TV to streaming, and a financial condition which gives management the flexibility to operate unconstrained during a transition period for the business. We also believe Netflix can leverage its massive global scale of 221 million subscribers into positive free cash flow though steady pricing increases and content spending controls. We added to our position during the quarter.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN)’s express delivery network came in handy during COVID lockdowns, when people relied on the service to order grocery and household essentials. Amazon.com, Inc. (NASDAQ:AMZN) is one of the best COVID stocks to buy now. On September 26, the company announced a Prime day shopping event in October, which is likely to attract more holiday shopping than the traditional Black Friday to Cyber Monday shopping period.
On September 29, Citi analyst Ronald Josey assigned a Buy rating to Amazon.com, Inc. (NASDAQ:AMZN) with a $185 price target. The analyst said Amazon.com, Inc. (NASDAQ:AMZN) remains his top pick with its Prime Early Access Sale ahead of the holiday season, improving Prime member engagement, consistent Web Services growth, and advancement on cost savings.
Among the hedge funds tracked by Insider Monkey, 252 funds reported owning stakes worth $30 billion in Amazon.com, Inc. (NASDAQ:AMZN) at the end of June 2022, compared to 271 funds in the prior quarter worth $48 billion. Ken Fisher’s Fisher Asset Management held a leading stake in the company, with 48.6 million shares valued at more than $5 billion.
Here is what Lakehouse Capital specifically said about Amazon.com, Inc. (NASDAQ:AMZN) in its July 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) proved resilient in the face of ongoing macro pressures and delivered a strong quarterly result along with “better-than-feared” guidance for the third quarter. Net sales increased 7% year-on-year (10% constant currency) to $121.2 billion, while operating profit declined 57% to $3.3 billion. The drop in operating profit was attributable not only to external macro factors, such as elevated shipping and fuel costs, but also lower productivity and efficiency costs as a result of some overcapacity on the back of its recent investment cycle. It was pleasing to see that the company has begun to make progress on the more controllable costs, particularly productivity and staffing, with headcount, for example, down almost 100,000 over the quarter. We continue to believe Amazon is well positioned to manage these short-term issues and remains on track to deliver significant profit improvements over the next twelve months.
Management also confirmed that they have not seen any deterioration in Prime membership growth or retention following the 17% increase in Prime fees put through earlier in the year. This is not surprising to us, as in our view, the price increase was more than justified given the tremendous amount of customer value that has been added since the last price increase was implemented back in 2018, which includes the doubling of its fulfilment network and workforce, significant expansion of free same-day delivery and considerable investments in video and music content. Ultimately, we remain positive about Amazon’s future and believe that the company’s scale and market leadership will continue to drive growth for many years to come.”
You can also take a look at Best Digital Currency Stocks To Buy and 10 Best Stagflation Stocks To Buy.
