This Day On The Street
Continue to site
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

2 Opportunities in Biotech

By Hilary Kramer of InvestorPlace

NEW YORK ( TheStreet) -- I am convinced that now is the time to invest in biotech. If you're familiar with biotech at all, you know it has traditionally been a risky sector to invest in -- shares of Human Genome Sciences (HGSI) recently plunged more than 10% in one day after the FDA questioned the effectiveness of its new Lupus drug. But as the industry develops and grows, it's becoming easier to minimize risk and identify the likely winners. And with the right strategy, you can make big profits in biotech.
  • Related Article: Top 10 Stocks NOT to Buy in 2011
  • As such, I have been investing in select biotech stocks and am pleased with the money I've made. Here are two stocks you'll want in your portfolio in 2011, and if you don't buy them now, you'll end up paying more to get them later!

    Finding Biotech Stocks to Buy -- Look for Takeover Targets

    One of the very best ways to profit from the biotech sector right now is to buy companies that are likely targets for acquisition. Many of the big pharmaceutical companies are in a precarious position right now. They've cut costs as far as they can and many of their blockbuster drugs are going to go off patent in the next three years. The next logical step in big pharma's search for growth is to start going after biotechs with a drug or two in the pipeline.

    Plus, as companies start to feel more confident in the new, more corporate-friendly environment in Washington, merger and acquisition activity is sure to pick up. I've got two biotech companies in particular that are both candidates for acquisition and just plain good buys right now.

    Biotech Stock #1: Shire

    The first stock I want to tell you about is Shire (SHPGY). I think it's almost a foregone conclusion that Shire, even with a $13 billion market cap, will eventually go to the highest bidder. But even if this acquisition doesn't come to fruition soon, Shire has other factors going for it that make it an appealing buy now.

    Shire is a biopharmaceutical company based in Ireland, but U.S. investors can own shares by buying the American Depositary Receipts (ADRs). The company has two key business segments: best-in-class ADHD medications and "orphan drugs." These are drugs that treat diseases affecting fewer than 200,000 people, and the U.S. Orphan Drug Act of 1983 provides incentives to encourage development of these treatments that might otherwise be skipped over because of the relatively small number of patients who would benefit.
  • Related Article: 5 Famous Pharma Stocks to Sell Now
  • Shire has a number of new drugs that should release clinical data or be rolled out of their pipeline during the fourth quarter. There are a total of 11 projects in full development of which eight are in Phase 2 or beyond. Many are expected to be approved and launched in the coming three years. Since most pharma companies have all their eggs in one or two baskets, this gives Shire breathing room in case any of these drugs fail to perform as expected or meet with delays.

    1 of 3

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    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
    Stocks Under $10

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

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    14-Days Free
    Only $9.95
    14-Days Free
    Dividend Stock Advisor

    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
    • Updates with exact steps to take - BUY, HOLD, SELL
    Trifecta Stocks

    Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

    Product Features:
    • Model Portfolio
    • Intra Day Trade alerts
    • Access to Quant Ratings
    Real Money

    More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

    Product Features:
    • Access to Jim Cramer's daily blog
    • Intraday commentary and news
    • Real-time trading forums
    Only $49.95
    14-Days Free
    14-Days Free
    DNDN $0.06 -6.02%
    AAPL $93.74 0.00%
    FB $117.58 0.00%
    GOOG $693.01 0.00%
    TSLA $240.76 0.00%


    Chart of I:DJI
    DOW 17,773.64 -57.12 -0.32%
    S&P 500 2,065.30 -10.51 -0.51%
    NASDAQ 4,775.3580 -29.9330 -0.62%

    Free Reports

    Top Rated Stocks Top Rated Funds Top Rated ETFs