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Fresh capital to be injected into biotech stocks: 5 Must-Buys

The recent rally in tech stocks makes us wonder which other sectors are in a position to lead the charge. One sector that comes to our mind is biotechnology, which is well positioned to move north. Biotech stocks have appeared to come back to life following two years of a lull. A flurry of biotech stocks had topped in the summer of 2015, losing steam soon after.

Now, however, they are on the verge of a break out cashing on President Trump’s tax plan spurring waves of buyouts, innovation reaching exponential levels and drug price outrage easing out. Hence, investing in solid biotech stocks seems to be judicious.

Biotech to Break Out

Investors have steered clear of tech behemoths that constitute the bulk of growth stocks on overvaluation concerns. As they believe that they will simply lose too much money here, they repositioned themselves in biotech stocks.  Even though this space was caught in the crossfire during the 2016 presidential election on “price gouging” concerns, it has recovered somewhat. Calithera Biosciences Inc CALA, Esperion Therapeutics Inc ESPR and Puma Biotechnology Inc PBYI have all added more than 100% this year, a clear indication that when money flows into biotech stocks, they soar.

The iShares NASDAQ Biotechnology Index IBB rose about 17% since Trump’s win. It, however, has more room to climb as it is still down 23% from its all-time intraday high attained in the July of 2015. This makes it an enticing bet for value investors. They look for companies that are fundamentally solid but underpriced and the IBB’s components fit the bill.

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