Biotech stocks to buy aren’t exactly the most popular investments on Wall Street right now. The “risk on” environment of 2013 seems to have evaporated, with volatility heating up and many investors taking shelter in old stalwarts like consumer staples and even bond funds. Biotech stocks are often seen as risky and more speculative by investors, particularly those who prefer entrenched health care stocks like Johnson & Johnson (JNJ) or Pfizer (PFE) in Big Pharma.
But if you’re looking for outperformance in 2015, then the modest risk but big-time potential of biotech stocks could be just what the doctor ordered.
There are many reasons to be bullish on healthcare stocks broadly — both because of the recession-proof nature of the sector, and the growth that is sure to come from greater access to insurance via Obamacare and demographic tailwinds thanks to aging Boomers who will need more care and medications.
Biotech stocks in particular are among the best stocks to buy because healthcare megacaps face questions of competition abroad, a strong dollar holding back international profits in 2015 and, of course, patent expirations on blockbuster drugs from years past
Biotech Stock News
SAGE Therapeutics (SAGE) is a prototypical development-stage biotechnology company. No, the company isn’t profitable, choosing instead to burn cash in the hopes of research and clinical trials that result in a blockbuster drug. But don’t overlook it just yet. SAGE stock is a top holding for one of the most respected and longest-running healthcare hedge funds out there, OrbiMed Advisors.
The iShares Biotech ETF (IBB) is a great way to play both entrenched players like the aforementioned Amgen as well as gain exposure to upstarts with big upside potential. The top three IBB holdings right now actually include Amgen at No. 1, Celgene (CELG) at No. 2 and Gilead Sciences (GILD) at No. 3 — collectively adding up to more than $300 billion worth of biotech business.
Acorda Therapeutics (ACOR) is another one of those small-time biotech stocks with very targeted treatments and patient pools. The drugs that Acorda produces focus on multiple sclerosis (MS), spinal cord injury and other nervous-system disorders.
Biotech Financial News
f you want to go smaller but still don’t like the risk associated with picking individual biotechs, consider the S&P Biotech ETF (XBI). As the name implies, it’s benchmarked to an S&P biotechnology index. This allows some modest players to get in there because the biggest players in the space are listed on the Nasdaq, and that makes the IBB biotech index pretty intimidating.
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