Which biotech companies are the best investments for your portfolio? Consider buying any of these eight A+-rated stocks.
Despite falling victim to the market volatility during the late summer, biotech stocks are set to outperform by a healthy margin in 2015.
The Nasdaq Biotechnology Index, which follows Nasdaq-listed biotech stocks, is up 9.5% for the year. The S&P Biotechnology Select Industry Index, which tracks biotech stocks listed on the NYSE, AMEX, Nasdaq and Nasdaq Small Cap Exchanges, is up 12%. Meanwhile the S&P 500 is in negative territory for the year.
Investors like to hedge their bets on biotech stocks because, while there is huge risk, the industry has the potential to offer high returns. The stocks tend to be volatile. But the list below is of large-cap biotech stocks that are rated "buy" by TheStreet Ratings, TheStreet's proprietary ratings tool.
TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.