A bull market is here: 2 high-potential stocks down more than 50% to buy right now

Although S&P 500 fell earlier this month, it is important to note that we are still in a very positive market environment. The bull market is going strong, with the benchmark up 17% this year. And since bull phases generally last longer than bear phases, the good times are likely to continue.

How can you benefit? Bringing together some players who haven’t hit their stride yet, but have the potential to do so. Two great examples are biotechnology Modern (MRNA -12.36%) and the pharmaceutical giant Pfizer (PFE -1.69%). Both surged early in the pandemic thanks to their best-selling vaccines, then suffered as that market lost steam. But these companies are more than just one product. Motley Fool contributors Adria Cimino and Keith Speights discuss these two high-potential stocks, both down more than 50% from their peaks, and why they’re worth buying right now.

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Moderna pipeline power

Adria Cimino (Modern): Moderna’s coronavirus vaccine really put this biotech player on the map. The company brought its messenger RNA vaccine to market in about nine months and went on to generate billions of dollars in revenue and profit. This helped the company’s stock and market value explode a few years ago.

MRNA data by YCharts.

But as demand for vaccines has fallen, so has demand for Moderna’s stock. The stock is down more than 80% from its 2021 high and is down nearly 30% this year. But I see this as a buying opportunity, and here’s why.

First, it’s clear that Moderna’s revenue from the coronavirus vaccine won’t reach the levels we saw during the worst of the pandemic — those were exceptional times. But the vaccine still represents potential for annual revenue hits, especially if Moderna brings its combined coronavirus/flu candidate to market. The candidate performed well in phase 3, so he is nearing the finish line.

Second, Moderna’s future is not tied to a single product. The company recently won approval for its respiratory syncytial virus (RSV) vaccine and has cytomegalovirus (CMV) and customized cancer vaccines in Phase 3 trials. Moderna also has dozens of other investigational drugs in the pipeline. Many of these other candidates are in Phase 2 trials, so the company has the potential to introduce several new treatments in the not-too-distant future if all goes well in these trials.

In fact, Moderna said it aims to launch up to 15 new products over the next five years. Even if the company reaches the halfway point of this goal, we could expect significant growth to follow.

Of course, Moderna’s stock probably won’t take off overnight. Investors may want to see how the company fares in the vaccine market this fall — Moderna is now selling both its coronavirus vaccine and its newly approved RSV vaccine — and may even wait to hear about next steps for current Phase 3 candidates. But , given the strength of its pipeline, Moderna has what it takes to be a winner when it comes to growing revenue down the road. That’s why right now, when the stock is down, is the perfect time to pick it up and wait.

A big pharma stock poised for a big comeback

Keith Speights (Pfizer): I fully understand why many investors would have written off Pfizer. The stock is down about 50% from its peak set at the end of 2021. Pfizer shares have fallen in both 2023 and 2024, while the overall market has risen.

This sad performance happened for two simple reasons. First, Pfizer’s revenue and earnings fell as sales of its COVID-19 products fell. Second, the company faces patent expirations on several of its top drugs over the next few years.

However, I think Pfizer is a great pharma stock poised for a big comeback. Company management predicts solid growth in the second half of this decade. The optimism is justified, in my opinion.

While I don’t expect Pfizer’s revenue due to COVID-19 to ever return to the high levels of 2021 and 2022, the worst should be over now. What about those looming patent expirations? They won’t magically disappear. But Pfizer prepared for them in part by making smart acquisitions. Business development deals alone should generate enough additional revenue to more than offset the negative effect of losing patent protection.

Pfizer has also invested heavily in internal research and development. As a result, it has a strong lineup of promising candidates who could be big winners in a few years. I rank the company’s oral obesity drug, danuglipron, at the top of the list.

Of course, Pfizer probably won’t be the favorite of growth investors, even with its improving outlook. However, value investors should like Pfizer’s forward earnings multiple of 10.6. And income investors should absolutely love the company’s forward dividend yield of 5.7%.

Two players with long-term potential

Moderna and Pfizer both benefited from the strength of the coronavirus vaccine, then lost their luster in recent years as revenues fell. But it’s worth giving these players a second look. Each of them has the potential to earn long-term sales, and today you can pick them up for a bargain. They may even gain momentum as this bull market story enters its next chapters.