Blue-chip biotechs are awakening from their long slumber as the overhang of the health care debate finally passes toward history. It appears that most segments of the worldwide drug industry, from molecule to pill bottle, will survive well in the post-reform era, letting this unique corner of the market thrive once again. These well-known companies have been underperforming their mid- and small-cap cousins since the market bottomed out in March 2009. That could change in coming months, with these stocks recapturing leadership from a more speculative group that includes Dendreon ( DNDN), Intermune ( ITMN) and Human Genome Sciences ( HGSI).
Amgen (AMGN) -- Weekly eSignal
Amgen ( AMGN) became the world's largest publicly traded biotech last year when Roche bought Genentech. It topped out near $86 in 2005 after a long uptrend and dropped under $40 in 2008, where it bottomed ahead of the broad market. Progress since that time has been erratic, with price stuck in a massive trading range for the last two years. The stock is now lifting toward range resistance in a relief rally triggered by the end of Washington's obsession with health care reform. Buying interest is perking up for the first time since July, and this uptick could mark the next phase in an eventual breakout and rally run into the mid-$70s.
Gilead (GILD) -- Daily eSignal
Gilead Sciences ( GILD) is a current pick in my TSC newsletter, The Daily Swing Trade. It bottomed out near $35 in October 2008 and spiked into the low $50s a few months later. It then settled into the upper $40s, where it's been stuck for almost a year. The stock is moving higher after Sunday's vote and could finally break out. A buying surge over $50 may trigger an uptrend that eventually tests the all-time high at $57.63, posted in August 2008. Looking back, this stock was one of the market's top performers for over a decade. Once the two-year high is cleared, it could resume its upward trajectory and reward long-term investors with excellent gains.