You might have seen the news that Moderna Inc. (Nasdaq: MRNA) joined the S&P 500 this week.
This is a huge deal. Being admitted to the world’s premier blue-chip stock index is a sign that a company has “made it.”
When you’re in the S&P 500, you’re no longer an upstart. You’re officially part of the establishment. Moderna, of course, is best known for its COVID-19 vaccine, which was one of the first commercial applications of messenger RNA (mRNA) technology.
Its addition to the S&P 500 is a major symbolic win, and not just for Moderna itself. Think of it as a vindication of the genomics revolution, or the rise of DNA-based medicine.
Moderna’s COVID-19 Vaccine Proved a Point
Moderna and rival Pfizer’s mRNA vaccines aren’t like traditional vaccines in their functions. Rather than inject a weakened form of a pathogen into your body, which spurs an immune response, mRNA vaccines send messages at the genetic level. These messages instruct your cells to create proteins that then push your immune system to build its defenses.
Moderna’s COVID-19 vaccine is only the beginning. It proved that mRNA technology works.
Now, the applications are almost limitless.
The company may have a revolutionary new flu vaccine ready to deploy as soon as 2023. And Moderna also has treatments for cancer, HIV and a host of other lethal diseases in the pipeline.
You might have heard me say that the genomics revolution is “bigger than the internet” in terms of its potential to change our lives and generate wealth.
Well, that’s not hyperbole.
This S&P 500 Move Is Huge for Genomics
I truly believe that we’re in the very early stages of a total transformation of the medical industry. This is the biggest change to medicine since the introduction of antibiotics or vaccines.
Again, it’s still early. But genomics (aka DNA science) has the potential to eliminate disease as we know it today.
But that’s not all. The applications go far beyond medicine. Genomics has the potential to revolutionize agriculture, food and even manufacturing. This is the stuff of science fiction, and it’s happening today.
Picking winners in the genomics space can be a challenge due to how new the technology is. And many stocks within the space are still very small and unproven. As an example, Moderna doesn’t rate high on my proprietary Green Zone Ratings system. It rates a 49 out of 100 overall. It’s the definition of an average stock.
But here’s where deeper analysis is useful.
The stock rates well in the quality, growth and volatility factors, rating in the high 70s or 80s in all three.
This is despite the fact that Moderna has a short history as a traded company, having gone public only in 2018. The company just achieved profitability this year.
MRNA rates well on these metrics despite these shortcomings. And as Moderna matures and its therapies continue to expand and go mainstream, I expect these metrics to only improve.
The volatility score is the most intriguing to me.
A high score here means less volatility, and Moderna rates a 79, implying it’s a low-volatility stock. Strictly speaking, Moderna is a volatile stock. With a beta of about 1.5, it moves about 50% more than the S&P 500.
Yet, the stock rates well on our volatility score because its risk-adjusted returns are high. This means that the returns investors have seen in MRNA make the volatility more than “worth it.”
Moderna is a great buy in its own right. Even before joining the S&P 500, its stock has gone up 200% since January.
While I like the stock — and its crazy-huge growth potential — its big move this week could soon throw gasoline on an already raging fire for the entire genomics sector.
Which means, it could push my No. 1 genomics stock EVEN HIGHER!
It, too, is up 200%! But it’s got a lot more room to run…
A lot more!
That’s because as Moderna gains even more recognition, it’s expected to drive investors to more and more stocks in this space…including my No. 1 genomics pick!
What’s more, this stock’s going to cash in BIG as the genomics sector — one of the most important mega trends I follow in Green Zone Fortunes — grows nearly 200,000% in the next four years!
To good profits,
Chief investment strategist, Money & Markets