3 Top Stocks to Invest in During the Summer of 2020
Date: May 7, 2020
Read Time: 4-6 Minutes
Despite Market Volatility, High-Yield Opportunities Exist
With continued concern over the global Coronavirus pandemic and scares of a widespread economic recession still hanging fresh, the summer of 2020 looks to be a fairly volatile period for stocks. Although the last 5 years heading into 2020 saw nearly 60% growth in the S&P, the onset of coronavirus shaved over $100 off of the share price of SPY, a major S&P 500 ETF. And while markets have since stabilized, fears of new outbreaks, mixed with uncertainty over vaccine development and the outcome of the U.S. presidential elections in the fall may still impede broad market gains.
However, despite the general market volatility that exists, there are still some fantastic opportunities for investment over the next 4-6 months. Among these options include several up-and-coming healthcare and mining organizations that could achieve unicorn status in the months to come.
In this article, I’m not going to touch on the “mainstream” opportunities for buying into Airline and Gas industries, as these investments are already receiving a lot of coverage. Instead, the more obscure investment picks highlighted here could easily yield 100%+ returns within the next several months if things go right. However, there’s a fair amount of risk involved in each investment. Among these potential blockbusters are several development-stage pharmaceutical firms, and what might become the world’s largest ever copper and gold mining facility.
3 Top Stocks to Invest In During 2020
Note that as an avid investor myself, I am actively maintaining “long” stakes in two of these companies; Northern Dynasty Minerals and Evoke Pharma. I held several dozen shares of Moderna in early January, but sold after an initial 20% spike and have yet to re-enter. I tell you this for purposes of full disclosure – I’m not trying to “sell” you on these picks, but merely presenting the analysis I conducted when deciding whether or not to invest myself. In all three of these cases, I ended up taking action.
1. Moderna (MRNA)
For those already following the race to develop a COVID-19 vaccine, you are probably aware of Moderna. The pharmaceutical research company has enjoyed widespread press over the past few months after announcing the receipt of a $483 million grant by the U.S. government’s BARDA program to advance their COVID-19 vaccine trials, and the preliminary results have been promising. Since the company first announced their coronavirus vaccine efforts in early February, the stock has jumped 150% (from ~$20 to over $50). At the moment, 9 of 10 major analysts covering the company have issued a “buy” rating, and the general industry sentiment has remained positive.
When evaluating the buy opportunities here, there are a few cautionary points I’d like to emphasize. The first is that the stock price of Moderna has already jumped considerably over the past few weeks, and may be due for a correction. Also, there’s no guarantee that Moderna will pass their preliminary vaccine trials, nor is there any guarantee that they will be the first company to successfully develop a vaccine.
As it stands, there are plenty of other companies, include major companies like Gilead Sciences, also hot on the case – about 80 companies in total, according to the World Health Organization. However, there is reason for optimism, as Moderna is one of the first companies to begin testing in human patients. And with the U.S. government’s allowance of “fast-track approval” for promising products, Moderna could hit the jackpot if the trials go smoothly. Considering that the U.S. government saw their vaccine as promising enough to grant nearly $500 million in funding, there’s a definite case to be had for going long.
Moderna 3-Month Market History
As of late April – early May, the price of Moderna sits right at $50. All things considered, I would still consider this as a fairly high entry point. It may be a few weeks to a few months before any major updates occur with Moderna’s human trials, and the other drug and vaccine trials they have ongoing are still too early to be of significance.
While the market waits for new updates, a correction could easily see 15-20% of the share price reduced. The best bet? Wait for a buy-in price closer to the mid $30s, and then hope that updates on successful trials in the late summer and early fall can boost the price into the high $50s and low $60s.
2. Northern Dynasty Minerals (NAK)
Investors that have been dabbling in penny stocks already are probably familiar with Northern Dynasty Minerals, owners of the Alaskan Pebble Mine or “Pebble Project”. As has been the case for years now, the Pebble Mine holds a wealth of untapped value – it’s technically the most underdeveloped copper and gold reserve in the world. Sitting on 417 miles in Southwest Alaska, the successful development of the Pebble Mine could result in billions of revenue from gold and copper deposits over the course of several decades.
As of early 2020, Northern Dynasty Minerals has yet to receive clearance to begin actual development of their mine. The problem lies with complaints lodged by a number of environmental advocacy groups who claim that the mine’s development would severely harm local wildlife – including a nearby salmon fishery. But while the company has been plagued by numerous environmental setbacks, the latest updates on legal proceedings have been positive.
NAK 5-Year Market History
As it stands, if Northern Dynasty receives clearance to carry forward from the U.S. Army Corps of Engineers in June, they will be nearly set to develop one of the largest and most profitable gold and copper mines in recent history. And with sufficient cash on hand and the potential for a large buyout pending their approval, investors that can scoop up shares at the current price of 0.55 could easily see triple-digit returns over the next year – and potentially 1,000%+ returns over the next decade. However, if the report from the U.S. Army Corps is negative, the path forward for the Pebble Mine would take a major hit and investors would be unlikely to realize any major gains in 2020-21.
3. Evoke Pharma (EVOK)
Evoke Pharma is a small and largely unheard-of pharmaceutical firm that could emerge out of nowhere to capture a large market share with their latest nasal spray candidate for treating Gastroparesis. Gastroparesis is a stomach condition that affects millions of Americans every year, and the existing medication, a pill taken orally, causes severe discomfort in many patients.
Evoke Pharma 5-Year Market History
Evoke Pharma’s innovative nasal spray to alleviate symptoms from Gastroparesis has already passed its late-stage trials, but it’s pathway to commercialization was halted by the FDA in late 2019 due to concern over side effects in several test subjects. However, Evoke Pharma has indicated that these issues are now resolved and they have resubmitted their New Drug Application (NDA) to the Food and Drug Administration (FDA) as of January 2020.
If this revised submission is approved by the FDA during their ruling in June, it would inject a new drug candidate into a field where there is only one existing FDA-permitted medication. Given that 16 million patients suffer from Gastroparesis symptoms in the U.S. every year, Evoke’s entrance to the multi-billion dollar market could result in massive revenues for shareholders, especially given the current share price of $1.22 and price targets set at $5-7 by analysts, pending successful approval by the FDA.
Although 2020 may end up being one of the most difficult years since the financial collapse of 2008 to achieve high returns, there are still opportunities that exist. While broad market indexes may be down, niche growth within specialized industries, like healthcare and mining, are still ripe for investment. And if ambitious investors are able to take advantage of current share prices for Evoke Pharma, Moderna, and Northern Dynasty Minerals, they stand to capitalize immensely if the major announcements that these three firms have in the near future yield positive results. If they do, triple-digit returns are all but guaranteed.
Although each of these investment options is undoubtedly risky, the promise of such high rewards might be worth it in the end.
Disclaimer: The author of this piece is “long” on several of the investment opportunities listed. The purpose of this article is not to convince you that a certain investment choice is right for you, but simply to present the research conducted by our team as we created our own personal investment strategies.