Buying growth shares in an election year is generally bad advice. During the last presidential election in 2016, growth stocks, on balance, dramatically underperformed the broader markets, while the value stocks as a whole yielded market-beating capital returns. To go a step further, some growth-oriented sub-sectors such as biotechnology were taken to the woods during 2016, thanks to the economic and regulatory uncertainties shaken by presidential policy promises.
The point is that investors should no doubt start a new position in a growth-heavy stock in the middle of a politically charged market, without a well-defined main catalyst firmly etched into the calendar. After all, this group of stocks with the inherent disadvantage of having to swim against the flow of presidential politics and everything that comes with it.
Fortunately, there are some select growth games that meet this rather high bar. The biotech stocks Amarin (NASDAQ: AMRN) and Heron Therapeutics (NASDAQ: HRTX) both have a strong chance of doubling their value in 2020, no matter how it the political landscape is developing in the meantime. Here is a brief overview of the key points investors need to consider about each of these promising growth plays.
Amarin: A recent hurdle
Wall Street's current Consensus 2020 target for Amarin has its shares rising by 86% over the next 12 months. However, this steady price target may still be missing the mark of a landmile. Understood by this point, investment banking firm H.C. Wainwright has deviated significantly from its peers on this equity by issuing a $ 51 price target on Amarin & # 39; s shares. For those of you who keep the score at home, Wainwright basically asks that biotechnology's shares be more than quadrupled in 2020.
What is all the fuss about? Amarin is scheduled to fight with the Food and Drug Administration's Endocrinologic and Metabolic Drugs Advisory Committee on November 14. The question is whether the company's prescription omega-3 treatment, Vascepa, is really a quantum leap forward in the treatment of patients. despite being on statin therapy. The FDA is expected to issue its final ruling in the case by December 28, according to a recent investor presentation.
Although the FDA is unpredictable by nature, Vascepa appears to have an excellent shot at addressing this high-dollar indication based on the unprecedented results of cardiovascular outcomes. The big thing is that lipid-lowering medications – especially those that aim to treat underlying cardiovascular disease – are some of the best-selling pharmaceutical products of all time. Pfizer Lipitor, for example, has accumulated over $ 100 billion in cumulative sales over its life cycle. Vascepa, in turn, can even outperform Lipitor from a total sales perspective.
Amarina's shares will surely announce the 2020 races if Vascepa clears this latest regulations.
Heron: A small-cap stock with mid-cap potential
Every year, a biotechnology stock mounts a furious comeback. Heron Therapeutics is poised to be that stock by 2020.
The downside is that Heron's shares crumbled this year in response to the FDA rejecting its experimental painkiller HTX-011. On October 1, Heron reported that it had successfully replenished the drug's regulatory application with the FDA, and that it is scheduled for a shortened six-month evaluation cycle. In short, the HTX-011 may be on the market by the third quarter of 2020.
Why should investors line up and take notice? Although Heron's anti-nausea medication has begun to show signs of a slow start, the HTX-011 is the drug that should put the company on the map. New painkillers are worth their weight in gold because of their long commercial shelf life and the well-documented need for non-opioid painkillers in acute settings. At a minimum, HTX-011 should be able to generate hundreds of millions in sales per year and maybe even achieve blockbuster states late in the next decade.
Wall Street, in turn, expects Heron's shares to more than double in value over the next year, with some analysts even asking for the biotech stock to rise by a jaw-dropping 306% from today's levels. While naysayers might call these price targets unrealistic, the fact is that Heron will almost certainly be a buyout target if the HTX-011 gets the green light from regulators next year. There is a great demand for this kind of medicine in the world of great pharmacy, and there is no easy business to develop one on your own. It is far easier to just pay to get one that is already on the market.