This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Time Is Right for These Seven Biotechs

Third, big retreats in the prices of some of the sector's leaders make it easier to put together a biotechnology portfolio that balances risk and reward.

Last time around, I argued for building a biotech portfolio by concentrating on companies with pipelines full of promising drug candidates and reducing risk by 1) making sure that these companies had plenty of cash, and 2) buying a basket so that any failures would be balanced out by successes.

This time, I'm advocating a strategy that builds a two-part portfolio with the first group made up of profitable, established biotechnology companies and the second part composed of the kind of pipeline-rich but unprofitable companies in my earlier portfolio.

Time for a New Strategy

Why the change? First, the stock market is different today from what it was two, three or five years ago. Investors are more risk-averse and more likely to want to see results before buying, rather than paying up for potential. That favors profitable, more established companies. Also, these well-established biotechs have retreated from annual highs, which makes them more reasonably priced than they've been in a while, and they are likely to lead any recovery in the sector.

Second, pipelines still pay. The stocks of companies that make the transition from owners of promising drug candidates to owners of promising drugs with Food and Drug Administration approval are likely to show the biggest pop over the next 12 to 18 months if the stock market recovers from its summer doldrums.

That's an important "if" to keep in mind. If investors continue to shy away from equities because they believe stocks are too risky, then biotechnology stocks will not experience a sustained rally.

2 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs