Looking back, it’s easy to find stocks that are big winners. Doing it before they take off is a whole different story. However, this is not an impossible task.
Three Motley Fool contributors believe they’ve identified stocks that could become monster winners in 2024. Here’s why they chose CRISPR therapeutics (NASDAQ:CRSP), Madrigal Pharmaceuticals (NASDAQ:MDGL)And Verona Pharma (NASDAQ:ARNV).
It pays to be an innovator
Thrive Junior Bakina (CRISPR Therapeutic): It’s been a great year for the field of gene editing. Several companies specializing in this area have made significant progress. However, arguably the most important step came from CRISPR Therapeutics, which, along with its partner Vertex Pharmaceuticalsgot Casgevy’s approval.
This treatment for sickle cell anemia and beta thalassemia (two rare blood diseases) is the first gene editing therapy on the market using the CRISPR technique, which earned its pioneers a Nobel Prize in chemistry. Although CRISPR Therapeutics stock hasn’t performed particularly well since the US approval of Casgevy early December, next year could be different.
CRISPR Therapeutics and Vertex are now launching this drug. With a price tag of $2.2 million in the United States, its potential is enormous and could reach several billion dollars.
But it won’t happen overnight. Gene editing treatments are difficult to administer and the process takes some time. However, both partners will use the next 12 months to establish a solid foundation for Casgevy’s long-term success.
The exercise will include the buy-in of third-party payers – an area in which Vertex Pharmaceuticals has a lot of experience – and the activation of approved treatment centers where the drug can be administered safely and effectively. In the meantime, CRISPR Therapeutics will advance other CRISPR-based gene editing treatments.
With Casgevy’s endorsement, the company’s work no longer seems hypothetical. The rest of the CRISPR Therapeutics line uses the same CRISPR gene editing technique with which Casgevy was developed. For all these reasons, CRISPR Therapeutics could be a major winner in 2024 – and beyond.
A rebound that could soon become more pronounced
Keith Speights (Madrigal Pharmaceuticals): With a market cap hovering around $4.7 billion, Madrigal Pharmaceuticals is not a monster stock at the moment. The company’s shares fell by a double-digit percentage in 2023, while the overall stock market soared. However, this biotech stock started to rebound in late October, and I think that rebound could accelerate soon.
I’m not the only one optimistic about Madrigal. The 12-month consensus price target for the stock reflects over 30% upside potential. The three analysts interviewed by LSEG in December, those covering Madrigal rated the stock a buy.
There is a simple reason behind this optimism. Madrigal hopes to gain approval from the U.S. Food and Drug Administration (FDA) for resmetirom in the treatment of nonalcoholic steatohepatitis (NASH) by March 14, 2024. The drug’s clinical data appears strong. It is important to note that there are currently no FDA-approved treatments to treat NASH, which has quickly become the leading cause of liver transplantation in the United States.
Madrigal appears to be in a good financial position to fund the potential commercial launch of resmetirom. The company raised $500 million via a public stock offering in October.
SVB Financial Group Analysts estimate that Resmetirom can generate peak annual sales of around $2.5 billion. Jefferies Financial Group forecasts even higher record sales of $3 billion. Whatever the actual amount, Madrigal could soon start generating significant revenue.
I’m looking for new CEO Bill Sibold to channel some of his new wealth into pipeline expansion. Sibold’s experience at Sanofi should give him a good foundation to lead Madrigal in its next stage of growth.
A small cap value with significant runway in 2024
David Jagielski (Verona Pharma): Verona Pharma is a stock with huge potential through 2024. It is risky to invest in a company because it does not have an approved product, its revenues are inconsistent and it has suffered net losses of just under of $51 million over the last 12 months.
But Verona’s finances and prospects could soon improve considerably. Indeed, the company has a promising treatment in its pipeline for chronic obstructive pulmonary disease, or COPD. Ensifentrine is an investigational drug that has demonstrated safety and effectiveness in phase 3 trials, showing improvements in lung function.
An estimated 380 million patients suffer from COPD, which is the third leading cause of death worldwide. Although there are treatments available on the market, many patients are dissatisfied with current options and the majority continue to experience symptoms even when receiving treatments. Ensifentrine offers patients a new alternative and has achieved good results in reducing patients’ symptoms and improving their quality of life.
The FDA is currently reviewing the drug, with the PDUFA date set for June 26, 2024. If ensifentrine gains approval, it would be a huge win for Verona. The drug could generate nearly $1.5 billion in annual revenue by 2033. Its approval could be a game-changer for Verona, as it would give it a consistent revenue stream.
If you’re willing to take a chance on this small biotech stock, the gains could be huge next year. The consensus price target is just below $33, implying nearly 60% upside potential for investors buying now. It’s certainly risky, but Verona offers incredibly promising potential.
Should you invest $1,000 in CRISPR Therapeutics right now?
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SVB Financial provides credit and banking services to The Motley Fool. David Jagielski has no position in any of the stocks mentioned. Keith Speights holds positions at Vertex Pharmaceuticals. Thrive Junior Bakina holds positions at Vertex Pharmaceuticals. The Motley Fool holds positions and recommends CRISPR Therapeutics, Jefferies Financial Group and Vertex Pharmaceuticals. The Mad Motley has a disclosure policy.
3 stocks that could be monster winners in 2024 was originally published by The Motley Fool