2 Top Pharmaceutical Stocks to Buy on the TSX Today

Consider investing in these two TSX stocks if you want exposure to the pharmaceutical industry’s performance on the Canadian stock market.

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Before a certain global health crisis hit the markets, it seemed that everyone was investing in the energy, tech, and financial services industries. As world economies almost came to an abrupt halt amid COVID-19, stocks in other areas of the economy came to the forefront of investor interest. One sector that shone well amid the pandemic and beyond has been the global pharmaceutical industry.

In 2022, pharmaceutical companies worldwide accounted for around US$1.5 trillion in global sales. Around half of it was generated between Canada and the United States. While the U.S. boasts the biggest names in the global pharma industry trading on its stock market, Canada also has a few key players in this industry.

While the pandemic has subsided, it is clear that pharmaceutical companies will continue to be top performers in the coming years. If you want to bet on the strength of the Canadian pharma industry, here are two TSX pharmaceutical stocks worth keeping on your radar right now.

Knight Therapeutics

Knight Therapeutics (TSX:GUD) is a $546.85 million market capitalization company headquartered in Montreal. Knight Therapeutics is a specialty and generic drug manufacturing company.

Its primary focus is on developing, acquiring, in-licensing, out-licensing, marketing, and distributing innovative pharmaceutical products, medical devices, and consumer health products. While Canada is the main market for its products, it also has a presence in select international markets.

Knight Therapeutics does not manufacture any drugs itself. Instead, it partners with other pharma companies to produce drugs that it believes have potential.

Rather than taking on the cost of production itself, Knight Therapeutics generates revenue by earning a portion of drug sales in exchange for in-licensing and out-licensing. Boasting licenses for over 100 products, solid cash flows, and lucrative partnerships with the likes of AstraZeneca, Knight Therapeutics stock trades for $5.24 per share as of this writing.

HLS Therapeutics

HLS Therapeutics (TSX:HLS) is a $116.74 million market capitalization pharmaceutical company based in Ontario. HLS Therapeutics is another specialty pharmaceutical company, following a business model similar to Knight Therapeutics. HLS stock acquires and commercializes branded pharmaceutical products in the North American markets.

The company has a particular focus that allows it to differentiate itself from other Canadian pharmaceutical companies. It prioritizes drugs that are responsible for treating problems with the central nervous system and cardiovascular issues.

Its products have a solid and growing demand that will not go anywhere soon. Boasting a small market capitalization with solid cash flows, it can be an excellent value bet in the Canadian pharma industry. As of this writing, HLS Therapeutics stock trades for $3.64 per share.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if HLS Therapeutics Inc. made the list!

Foolish takeaway

Since many pharmaceutical companies trading on the stock market in Canada right now are small-cap stocks in their growth stages, it is essential to understand the risk to investor capital. Growth stocks offer you an opportunity to generate significant returns on your investment. However, these are smaller companies more prone to the impact of market volatility.

If you have an appetite for some risk and a well-balanced portfolio, allocating some capital to high-growth-potential pharmaceutical stocks can be a good way to end the year. To this end, Knight Therapeutics stock and HLS Therapeutics stock can be ideal investments to consider.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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