The Dow Jones dropped over 2000 points yesterday; meanwhile, several pharmaceutical stocks like Enzo Biochem (NYSE: ENZ) are climbing to new highs. The reason for the recent rise is because ENZ announced that they would start testing for coronavirus.
As mentioned earlier, Enzo reported that they would begin testing for the coronavirus. The company said in a press release that it would start accepting specimens for testing this week. Enzo Biochem said to its many years of experience in processing specimens for the detection of viruses similar to the coronavirus. The ENZ uses molecular testing to determine if the viral RNA is present.
In addition to being the test being accurate, they also protect people that collect the specimen, which helps reduce the risks of transmission. ENZ is currently talking to the CDC about using it’s testing on a larger scale for the coronavirus.
Is ENZ Stock A Buy?
Many investors are asking themselves if ENZ stock is coronavirus buy because of the recent climb due to the test. Unfortunately, we can not recommend ENZ stock at this time.
There are two main reasons why ENZ stock is not a “buy” for most investors:
- Poor Return On Investment – Over the last twelve months, ENZ has reported a ROE of 2.2%. This means that for every $1 worth of shareholders’ equity, it generated only $0.02 in profit. Although the average for the sector, it is not ideal.
- Stock Rise is Hype Based – ENZ stock price has shot up like a rocket, but will likely come down very fast once the coronavirus is played out or a change in the sentiment.
- Bad Trend & Technicals – Before the coronavirus, ENZ stock was in an extreme bear trend, that lost over 50% of the value from July 2019 to March 2020.
Bottom line – ENZ stock is not a buy because the risk is too significant that it will drop like a rock at a moment’s notice. We are always trying to find the “Alpha” or upside with investments, but to get a good ROI, you need to look at the risks. ENZ is not a buy right now because of the risks.
Stock Market Today
Get ready for another bumpy ride today in the markets. Investors are asking, “Was That The Low or Simply A Low?” Yesterday, the stocks fell the most since the financial crisis, and it looks like there is very little support. Expect a bump up today, but at any given moment, the market could plunge to new lows.
Energy stocks took the biggest hit because of the Saudi oil price war. It doesn’t look like it will last long as both sides have reasons to come to the table. Futures are set to open high today, but, as mentioned above, don’t hold your breath.
Get ready for another stock market rollercoaster day!
Tom, aka T Rex, is seasoned financial pro that cut his teeth on the Chicago trading oil futures in 1995. He has bachelor’s degree in finance and management. In less than 3 years he bought his own seat and set up shop on the exchange. For the next 10 years Rex traded his own account and some institutional accounts. In 2017, he decided to move to Florida and focus on educating traders and writing for financial websites.