We have written a lot in recent weeks about the use of factors during various stages of a market cycle. To summarise: momentum has defensive qualities which keep stocks propped up when markets are crashing, value has the highest propensity to recover in the immediate aftermath of a sell-off and the StockRanks have a track record of wealth protection during financial crises. We’ve also examined sector trends and speculated that it might be too early to switch to cyclicals to take advantage of big price drops.
So where to invest right now?
Fighting my natural (bear market first-timer) instinct to pick stocks that I like which have sold off extensively and now look better value than they have done for the last couple of years, I have used Stockopedia’s screening tools to find stocks which are not tied to the market cycle (defensives), display high quality, decent value metrics (high QV StockRank), but have underperformed their own market (relative share price trend less than 0% in the last year).
Limiting my selection to companies larger than £1bn and broadening my remit outside of the UK (where my screen’s output left me uninspired) resulted in a selection of 34 US stocks, two of which caught my eye: Moderna (US: MRNA) and BioNTech (US: BNTX).
A blast from the Covid-past
When Covid-19 first arrived in the US in early 2020, BioNTech had only been listed on the public markets for a few months. The company had endured a relatively humiliating IPO which saw it valued at $3.4bn - below the valuation given at its most recent private fundraising. Still BioNTech joined Moderna as one of the biggest biopharma IPOs of the decade, with both companies seeking to contribute to America’s burgeoning immunotherapy market, where patients’ own immune systems are coerced into fighting diseases such as cancer.
And then came Covid-19 and the world looked to pharmaceutical companies with immune system expertise. At the time BioNTech had a number of potential immunotherapies for ten different infectious diseases but no plans to take them into clinical trials until 2021. Moderna had six vaccine candidates in clinical trials for rare infectious diseases and an innovative platform for identifying new immunotherapies at pace. By March 2020 both companies had selected novel vaccine candidates for the protection against what was then known as ‘a…
