The S&P 500 has shown signs of weakness from September, down more than 1% so far this month. And with many stocks in the index trading at highs, there is certainly room for further correction. Given that the index has climbed over 50% since March 2020, it’s easy to see why some investors might consider cashing in the gains they currently have.
That said, a few stocks have struggled this year, but could still be underestimated as the final months of 2021 approach. There are reasons to be bullish on both. ChemoCentryx (NASDAQ: CCXI) and Beyond meat (NASDAQ: BYND), like these two growth stocks show a lot of potential not only in the second half of the year, but also in the long term.
Image source: Getty Images.
Shares of biopharmaceutical company ChemoCentryx fell off a cliff earlier this year after a key drug, avacopan, which treats autoimmune and inflammatory diseases, failed to receive an overwhelming vote of confidence from an advisory committee of the United States Food and Drug Administration. Although the drug has completed Phase 3 trials for a rare form of vasculitis (inflammation of blood vessels), the advisory committee was divided over whether the resulting data supported its effectiveness.
According to analyst estimates, the drug could generate nearly $ 2 billion in peak annual revenue for ChemoCentryx, which would be a huge boon for a company that, in the past 12 months, has recorded just $ 21 million. dollars in sales (while recording losses of $ 123 million). As with many biotech companies, a lot depends on drug approvals. And while the news is not encouraging for avacopan, the FDA still has not officially made its own decision. ChemoCentryx amended its new drug application for avacopan in July and expects the FDA to make a decision by October 7 – which is the date of Prescription Drug User Fee Act (PDUFA) Date.
A positive result there could quickly turn ChemoCentryx’s fortunes around. At one point this year, healthcare stocks were trading above $ 70. Today they are less than $ 20. And while it’s unclear whether it can revert to its previous highs, a green light from the FDA could quickly double or even triple the share price – and put it on a much more positive trajectory ahead of the next year and beyond.
Although ChemoCentryx is a risky buy, the company has made adjustments to its new drug request that should address FDA concerns. This stock could be a calculated risk worth taking, given its upside potential.
2. Beyond meat
Beyond Meat had a volatile year in 2021, as the state of restaurant reopening and the strength of the economy are inevitably tied to the performance of this stock. Its plant-based burgers have been a hit in grocery stores and restaurants, but if closures are in place and consumers don’t eat out, the stock will suffer. (Year-to-date shares of Beyond are down 9%, compared to gains of 18% for the S&P 500.)
The increase in COVID-19 cases has cast a shadow over what has generally been a promising growth stock. In 2020, sales increased by over 36% from the previous year, even with mediocre restaurant revenues that declined year over year. During this period, foodservice sales made up about a quarter of total revenue – in 2019, they were close to a 50-50 split between the two business segments, foodservice and retail.
If the restaurant business can recover, the business could experience strong growth. Earlier this year, Beyond struck a deal with the fast food giant Mcdonalds to provide the pancake for his new vegetable burger. Additionally, he announced new meatless chicken fillets that will be available in American restaurants.
So while Beyond Meat’s stock is down this year, I wouldn’t consider it a bad buy. As vaccination rates increase and (hopefully) the number of COVID-19 begins to decline in the near future, this could be a great salvage stock to keep. And even if the stock drops further in the coming weeks, it will only equalize better buy for the long term.
10 stocks we prefer over ChemoCentryx
When our award-winning team of analysts have stock advice, it can pay off to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Equity Advisor, has tripled the market. *
They have just revealed what they believe to be the ten best stocks that investors are buying now … and ChemoCentryx was not one of them! That’s right – they think these 10 stocks are even better buys.
* The portfolio advisor returns on August 9, 2021
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.