Our aging population has boosted biotech and pharmaceutical stocks, as Baby Boomers seek better care, new innovation and ways to live healthier and longer.
For the next twenty years, an average of 10,000 Boomers will retire each day.
Ever since the first Baby Boomer retired in 2008, the biotech sector has been incredibly explosive. The SPDR S&P Biotech ETF (XBI) ran from a low of $16.71 to a recent high of $84.62 – a 406% move in less than nine years. The iShares NASDAQ Biotech ETF (IBB) exploded from just $70 to $335.85 recently – a 380% move.
The Pro Shares Ultra NASDAQ Biotech (BIB) has been a big runner, too.
In fact, since appearing in 2010, the fund has run from a low of $5.71 to a recent high of $62 – a 986% move in less than eight years.
The biotech sector has a history of being extremely volatile, and we’ve seen with the IBB index. However, as a long-time fan of the sector, I can tell you with a good amount of certainty that even at $333.85, the IBB has the potential to continue to move upward.
Some of the best-known biotech and pharmaceutical names were on sale lately. Amgen (AMGN) pulled back to $167 before rocketing to $178 days later. Celgene (CELG) fell to $127 before moving to $139 in days, too.
Smaller stocks, like AVEO Pharmaceuticals (AVEO) just returned potential profits of 112% in six months for The Cheap Investor subscribers.
Verastem (VSTM), which we wrote about in yesterday’s article, is up more than 249%.
In the last couple of issues of The Cheap Investor, we recommended two low-priced biotechs – Inoteck Pharmaceuticals (ITEK) and Endocyte, Inc. (ECYT). Each has several products in development, with each stock selling at a price significantly below cash per share. We still think these two stocks have great investment potential, by the way.
Mergers and acquisitions, like the $12 billion cash deal between Gilead Sciences (GILD) and Kite Pharma Inc. (KITE), are causing some biotech stocks to rocket, too. GILD shot from a low of $72 to $84 in two weeks. KITE soared from $139 to $179 in one day.
Sector innovation is just as impressive.
We’re even seeing advancements in gene editing, which researchers hope to use to correct gene mutations, and potentially cure disease. That’s why stocks like CRISPR Therapeutics (CRSP) soared from a June 2017 low of $14 to $21. Editas Medicine (EDIT) jumped from a low of $13 to nearly $24. Intellia Therapeutics (NLTA) jumped from $11 to more than $22.
The IBB is hitting new highs, primarily because the major biotechs are moving. Usually when this happens, the big biotech stocks move first, and the smaller ones follow.
Since we have had such a large number of biotech winners, The Cheap Investor will continue to seek opportunities in this sector.