Biotech Is Booming: 2 Picks to Cash in On
This year is shaping up to be a huge one for biotech — partly because of major biopharma mergers and acquisitions.
Roche Holding AG announced plans to acquire gene therapy company Spark Therapeutics for $4.8 billion. Bristol-Myers Squibb is moving forward with a $74 billion buyout of Celgene.
And the news has triggered speculations of a merger wave in the industry — boosting gene therapy company stock prices and biotech exchange-traded funds (ETFs) alike.
This tells me now’s the time to jump into biotech, after a period of uncertainty — tied to what I call “fake news” about political efforts to overhaul the U.S heath care system.
In today’s update, I explain why the long-term upside of biotech is huge and give you two ways to capitalize now for big gains.
Bold Profits Daily
April 23, 2019
Hey guys. This is Paul with your Bold Profits Daily.
Today I am giving you an update and a re-recommendation on a hot sector of the market that I told you about earlier this year. The sector I am talking about is biotechnology.
Biotechnology was all the rage a couple years ago. It peaked out in something like 2015 or so.
Since then, it’s been a little dormant and trading in a range. I told you back on January 7, in a Bold Profits, that it was time to get back in to biotech. That call was a good one. Since then, biotech has gone up and has gone up a lot.
In fact, it has gone up from the time we told you to buy in about 25%. It peaked out on April 5, and since then it has moved back down. I want to give you an update on what’s going on. Three reasons why I believe it’s time to reload on this trade because I believe bigger gains are coming.
Going back to the original recommendation. On January 7, we told you to get in. Because health-care stocks and biotech stocks have sold off, it’s only up 12% since we told you. However, many of you are probably thinking you should give up, but I would tell you to reload. Here are three reasons why.
No. 1, the particular ETF I told you about is unique in that it has an equal-weighted way of making bets. Most ETFs weight the bigger companies. In other words, if a small company with a tiny amount of weighting was taken over and went up 50% in a day, it just wouldn’t move the needle on these other ETFs.
However, on this one, it would matter. As you know from previous updates, there’s a lot of takeover activity going on. A lot of these smaller companies are being bought up by much bigger pharmaceutical and biotech companies.
So, the equal-weighted structure of the ETF that I told you about, is one reason to get in. In other words, the environment is good for these small and mid-size companies that are being bought and they’re also being bid up a lot.
Now let’s go back to why there’s been a falloff in the performance of this ETF. Well, you can blame it on politics. There is a lot of talk about Medicare for all and drug price regulation. And every time somebody says something, people go to take gains and sell their stocks down. That pushes prices down.
However, the reality is that this is, in some ways, fake news. This is never going to happen. And if it did, it would unfold slowly over time. We have a health care and drug system here that you can never change overnight. You would have to slowly reform it slowly over time.
You would still want lots of incentives for the kinds of companies that are in this ETF to succeed. Small and mid-size companies that are pursuing medications, medicines and drugs for conditions where there is nothing else.
So, I would tell you this is a false scare and you should stay in and not worry about it.
Third reason you want to be in is that the growth rates in terms of sales — which is what really matters in terms of stocks — are huge for so many of the companies that are in this ETF. In fact, when I looked it up, some of the companies have growth rates of as high as 45%. That particular company is in my True Momentum service. And I’m about to recommend another company for my True Momentum service that has a growth rate of in excess of 30%.
That’s a big number and that could go higher. I can tell you the biotechs that we have recommended in the True Momentum service have skyrocketed. We have 100% gains and even more. And I believe this next pick could be as big, if not bigger.
As I tell you all the time, if you want the big gains you got to be in the single stocks. The ETF will give you incredible, perfectly good gains. Single stocks will give you skyrocketed, explosive gains.
So, check out my True Momentum service. My publisher will be sending out emails on all this along with an opportunity to get in.
In the meantime, stay in the biotech ETF I recommended. It is the SPDR S&P Biotech ETF (NYSE: XBI). That’s my recommendation for you this week. Stay in biotech or get back into biotech if you got out. Because this ETF being equal weighted gives you lots of ways to win. The sentiment and expectations are down because of politics. Most people have gotten out.
There’s a lot of demand on the sidelines waiting to get back in once these prices start moving up. And the underlying sales growth is just massive. That’s what matters, that’s what attracts investors and that’s what is going to push this ETF up.
That’s all for you this week. I’ll have another one for you next week. Until then, this is Paul saying bye.
Tap Into the Real Wealth of the Health Sector
In recent months, political trash talk about health care reform has made biotech stock investors jittery. Drug companies like Roche and Bristol-Myers could suffer.
But it’s short-term turbulence that won’t sidetrack the huge gains ahead for biotech companies. The U.S. health care system is not likely to change significantly, and is actually on a roll.
That’s why I’m recommending you buy in now, for the gains to come.
One way to do that is to subscribe to my services, which include profitable biotech stocks. For instance, in the next week or so, I’ll be recommending a stock for my True Momentum service that my research projects will have a 30% growth rate.
As you know, I’ve always said the big money is in individual stocks like these. So stay tuned for my announcement.
Another way to tap into this mega trend is to buy into an ETF that holds stocks of biotech companies poised to take off.
In today’s video, I recommend a great ETF — one I’ve advised buying into before.
It is equal-weighted, which means that a big breakthrough by even one of the small- or midsized companies in this fund would send the value soaring.
Check out my video today to find out my recommendation and to learn more about why biotech is booming.
That’s all I have for this week. I’ll be back next week with another Bold Profits Daily.
Editor, Profits Unlimited