Motley Fool: Value in vaccines

Late 2019 was a great time to buy shares of the biotech stock Moderna (Nasdaq: MRNA): The stock has soared more than 600% since then. But right now might be an even better time to invest in it.

For one thing, Moderna is a less risky proposition now, with its mRNA technology proven to work and its coronavirus vaccine generating billions of dollars in revenue and profit.

It’s working on testing an mRNA influenza vaccine and a pan-respiratory vaccine, too. There’s even more to Moderna than that, though. Many of Moderna’s programs have made it to late-stage development.

Several candidates – excluding those in the coronavirus program – are in Phase 2 studies or further along.

Moderna recently began phase 3 trials for a cytomegalovirus (CMV) vaccine and a respiratory syncytial virus (RSV) vaccine. Both could become blockbuster sellers.

Moderna is close to becoming a multiproduct company, and there’s a good chance it will keep generating revenue from coronavirus vaccines for years to come.

It has 44 programs in development; not all will make it to market, but if even a handful do, that can keep the company growing in value.

Meanwhile, Moderna’s stock was recently down some 70% from its 52-week high, with a recent forward-looking price-to-earnings (P/E) ratio in the single digits.

That should pique the interest of long-term investors. (The Motley Fool has recommended Moderna.)

Ask the Fool

Q: How can I determine a company’s intrinsic value? – C.W., Columbus, Ohio

A: You correctly understand that while a stock’s price reflects its current market value, its intrinsic value is what each share is truly worth.

There’s no universally agreed-upon intrinsic value, though: It all depends on factors such as estimates of future earnings and growth rates – and on which factors you use.

Savvy stock analysts will often disagree on a stock’s intrinsic value.

If you can estimate an intrinsic value for a stock, you might consider buying shares if the current price seems well below that value or selling if it’s well above it.

Note that simply hanging on to great stocks for many years, through ups and downs, can also be enormously profitable.

Q: If my 401(k) account doesn’t offer any index funds and I want to invest in one, what should I do? – P.L., Watertown, Wisconsin

A: Index funds are great choices for most of us, as they require little work from investors and they often outperform many respected mutual funds.

Start by contacting your company’s 401(k) administrator to ask that they add an index fund or two.

Then move on to Plan B, investing in index funds on your own, through your brokerage or the websites of mutual fund companies. Charles Schwab, Fidelity and Vanguard, among many other brokerages, offer a variety of low-fee index funds.

Exchange-traded funds (ETFs) often track various indexes too, and they trade like stocks, so you can invest in them through a brokerage account.

Some to consider include the SPDR S&P 500 ETF Trust (SPY), the Vanguard Total Stock Market ETF (VTI), the Vanguard Total World Stock ETF (VT) or the Vanguard Total Bond Market ETF (BND).

My dumbest investment

Quite a few years ago, I bought 200 shares of Apple at $17 per share; a few months later, I sold them for $34 apiece.

I hadn’t lost faith in the company, but as a novice, I was just thrilled with that 100% gain. I had doubled my money!

But if I’d hung on, I probably would have several thousand shares now after all the stock splits – and at a recent price of about $160.

That kind of money could have been life-changing.

For the record, I’ve made plenty of other buy and sell mistakes, but this was the costliest. – M.H., online

The Fool responds: Most investors have made many mistakes and learned valuable lessons the hard way.

This one must hurt, though: After splits you’d have had 5,600 shares, and they would have had a recent value near $900,000. Selling your Apple shares would have been the right thing to do if you’d lost faith in management, or if you’d simply found a more compelling stock.

It would have been reasonable if you thought Apple’s shares were wildly overvalued and likely to fall, too.

It’s easy to see, in hindsight, that hanging on to your shares would have been best – but few people knew how big Apple would grow.

In the future, if you’re torn about selling a stock, you might sell only some of your shares.