All of us dream of finding the next 10-bagger. By that, I mean a stock that will increase 1,000% from our purchase price. If that happens even after a few years, we can proudly say we’ve made a great investment. Then there’s an even better dream. That’s when a stock skyrockets by this much or more in just a year.
Since the start of 2021, three healthcare stocks are showing us they may be on the way. They each have posted triple-digit percentage gains. Let’s take a closer look at these exciting movers — and see if they truly have 10-bagger potential.
Ocugen (NASDAQ:OCGN) recently entered the coronavirus vaccine race through a collaboration deal with Bharat Biotech of India. As part of the agreement, Ocugen gains rights to co-develop and commercialize Bharat’s vaccine candidate in the United States. As a result, Ocugen shares have soared more than 400% since the start of the year. A recent report from Bharat’s phase 3 trial in India showed the candidate — Covaxin — was 81% effective. And the data indicated Covaxin can handle the U.K. variant.
Can the stock keep climbing? It’s possible. Future catalysts include more data reports from Bharat’s clinical trial and word from U.S. regulators about when and how Covaxin may enter the market. Ocugen could become a 10-bagger for some investors this year if those catalysts are positive.
But here’s my concern: I worry about how Ocugen can actually carve out market share in the U.S. The country already has bought enough doses from bigger rivals to vaccinate the entire population. Of course, the U.S. will need more doses in the future. But to take share from leaders, Ocugen will have to show its product is better. And so far, the data hasn’t supported that. So I’m worried the stock may not be able to sustain a 1,000% or more increase.
While we’re on the subject of COVID-19 vaccines, let’s talk about Gritstone Oncology (NASDAQ:GRTS). The company in January said it’s planning a phase 1 trial for a second-generation coronavirus vaccine candidate. The stock soared — and now it’s up about 290% year to date.
In a recent update, Gritstone said it aims to generate phase 1 data by the middle of this year. Here’s what makes this vaccine candidate stand out: It targets the coronavirus spike protein and other parts of the coronavirus antigen. That means it may have a good chance of working even if the spike protein mutates. And that could result in stronger protection against new strains of concern. Today’s vaccines focus on the spike protein.
If Gritstone’s candidate is successful, it would be useful to protect against future pandemics — so it represents opportunity down the road. The company also has eight other infectious disease and oncology candidates in the pipeline — including three in phase 2. And Gritstone recently announced a collaboration with Gilead Sciences to develop a vaccine-based cure for HIV.
Gritstone may become a 10-bagger this year if its coronavirus vaccine candidate produces strong trial results. If it doesn’t, the shares will surely drop. But here’s some good news: In either case, Gritstone’s other pipeline candidates might have what it takes to make this biotech stock a 10-bagger in the long term.
Now, let’s turn to veterinary diagnostics. The big day is approaching for Zomedica (NYSEMKT:ZOM). The company will launch its first product on March 30. And that product is Truforma, a detection system for thyroid and adrenal disease in dogs and cats.
The company will sell the toaster-size device along with three assays to veterinarians in a limited geographic area at first. Then it will expand the number of tests and its geographic presence later this year. Zomedica faces competition from bigger companies such as IDEXX Laboratories. But demand means there likely is room for Zomedica to take a comfortable spot in the market. The companion animal diagnostics market is expected to reach $3 billion by 2025, according to a Markets and Markets report.
The main question now is: Will Zomedica win over veterinarians? So far, investors are optimistic. The stock has jumped more than 800% year to date. If the launch goes well, this stock probably will become a 10-bagger pretty quickly. But for lasting gains, Zomedica will have to prove that it can deliver sustained sales growth. And that may take years. For cautious investors, it’s a good idea to take a look at initial sales trends before leaping into this animal health stock right now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.