The Wealthy Biotech Trader (or “WBT”), an investment newsletter focused on showing everyday investors exciting opportunities in rapidly growing biotech, pharmaceutical, medical device stocks changing the world while making investors exceptional profits, would like to alert traders about several new stock ideas as healthcare/ biotech stocks find a bottom within the recent market correction, and resume upward momentum on their exceptional 5+ year bull market run, which has outpaced the Dow Jones Index (NYSE: DIA) by a factor of 5:1.
The broader market is down about 3% over the past 12 months — not very impressive. But over the same time-frame the NASDAQ Biotech Index is actually up 13%. Relative outperformance is the mark of a winning sector. And although the broader market may slip a bit more, it is looking as though, at least from a technical standpoint, that we are near a support level — or perfect entry point for strong sectors and industries like healthcare and biotech, respectively. Market dips excite smart traders because they use them as strategic entry points.
With an aging population, as well as drug and medical device companies developing new expensive treatments almost daily, there will always be opportunities to find the next Apple or Google and get in early to make outsized returns. That’s why we like smaller, rapidly growing companies in the healthcare space which are “disruptive” to the norm, and creating paradigm shifts. An example of a paradigm shift would be when the media snapped a few pics of Paris Hilton using a Blackberry and then they became ubiquitous across the globe. Or when Uber figured out consumers would rather be picked up in seconds, in a clean SUV, with a friendly driver for the same or lower price compared to a traditional cab— now they’re worth more than $50 billion. These opportunities happen all the time. We feel as though the majority of wealth creation in the next several decades in stocks will be won on the backs of companies developing new drugs, therapies and medical devices.
Here are 4 of our favorite stocks ranging from early and small (with the most upside, in our opinion), to mega-behemoth companies valued at over $100 billion in the market. Here is the list from smallest to largest:
PositiveID (OTC: PSID) is our Small Cap pick for the next 12 months. PSID is a company blazing trails and turning an industry on its head. PSID is a medical device company developing the Firefly Dx, a handheld device that is essentially a “lab in the hand,” which, when fully developed, could test anyone or anything for contamination or disease ranging from Ebola, to E.coli, to influenza, to MRSA, and more at the point of care. The Firefly Dx is being designed to test for any of these pathogens, from the palm of the user’s hand, within 20 minutes at a much lower cost than existing methods. Traditionally if one wanted to test a person, an item or even food for contamination, they would have to take a sample to a lab (which in and of itself adds significant time and puts the sample at risk for contamination) which takes a minimum of 4 hours to provide results, and is very expensive.
To our knowledge, this is a one-of-a-kind product that would address a significant portion of a $27 billion market (or segments thereof). The breadth of usage of the Firefly Dx can be very broad as it can be used in humanitarian/homeland defense to guard against spreading of pathogens such as Ebola; in hospitals/clinics to test equipment, etc., for devastating pathogens such as MRSA before spreading; in a doctor’s office to give immediate results for influenza (by strain); or in any food processing facility to perform frequent checks on produce/meats to prevent recalls for pathogens such as E.Coli which are PR disasters for these companies.
This company is development stage, but has very serious potential upside as it trades slightly under $0.03 per share at an overall market cap of roughly $9.5 million. Once commercialized, even if the Firefly Dx garnered a small amount of market penetration, we feel the Company could be worth 10 – 100X what it’s trading at now, based on industry price-to-sales multiples.
PSID has been making recent and frequent updates on the development of the Firefly Dx and also recently announced a strategic financing from an institutional investor, which is funding the development program for this unit to commercialization— a great time to be in and around this name. View PSID’s stock quote and news here: http://goo.gl/vyi9iN
Inogen, Inc. (NASDAQ: INGN) is our Mid-Cap (market value between $1 billion – $10 billion) forever stock. NASDAQ: INGN has essentially built a better mousetrap with their oxygen concentrators. Patients diagnosed with a condition requiring them to use oxygen therapy used to have to wheel around clunky tanks not knowing when they will run out of oxygen. Now INGN’s oxygen concentrator runs off long use batteries and simply uses normal air to create oxygen, on demand, for the user. They only weigh about 3-5 pounds too. They are very smart, and are quickly becoming the only option in a $7 billion global market, and with 2015 sales guidance in the $150 million range, this Company has plenty of room to grab market share and plant it firmly on their income statement. INGN looks to WBT as a forever stock and we mentioned in our last report as “a buy if pulls back to the $45 range,” which it is currently in.
Kite Pharma, Inc. (NASDAQ: KITE) is our (slightly larger) Mid-Cap forever stock. KITE’s cell therapy technology to treat blood cancers is something out of a science fiction novel. As crazy as what they’re doing seems, it’s all pretty simple (and natural): they are re-training the human immune system to go after cancer cells and destroy them. Human T-cells, or the “foreign attacker” cells, are not naturally predisposed to fight cancer— they actually ignore it somewhat. KITE removes a person’s T-cells, engineers them to seek and destroy cancer, multiplies them by the billions then re-introduces them into the body. And although early stage, the results thus far have been extremely positive. KITE is currently conducting a phase I study of their cell therapy in patients with non-Hodgkin lymphoma, has made positive remarks about the progress in press releases and plans to present all of the data at the American Society of Hematology in December— this could potentially be market moving news so traders may look to position themselves accordingly.
Gilead Sciences Inc. (NASDAQ: GILD), our Mega-Cap (market valuation greater than $100 billion) forever stock, seems, from the surface, almost too good to be true.
From a valuation perspective, we do not know if we’ve seen an undervaluation so compelling, especially when compared to how quickly the company is growing revenues and earnings. GILD’s P/E ratio based on 2016 projected earnings is an extremely low 8X. When you compare this to the overall biotech industry of about 25, that stock is trading for about 1/3 of what if should be if it just caught up to its peers. On top of the low valuation, GILD is growing its net earnings at an astounding clip, 22% per year over 2014 – 2016. An investor would be hard pressed to find a stock valued that low with that kind of growth anywhere in the market— and even if the economy took a turn for the worse, these drugs will still likely be purchased by government health coverage giving them an additional checkmark for earnings security and visibility.
With a projected $20 billion in 2015 free cash flow from blockbuster drugs treating major diseases such as AIDS and Hepatitis C, and many new potential blockbusters in development, Gilead looks to be a no-brainer “forever stock,” and don’t forget the comparatively large 1.8% dividend (better than the bank, we’re sure).
The Wealthy Biotech Trader is always researching new trade ideas which have the makings for large market moves. Traders are urged to follow our parent outlet, The Wealthy Venture Capitalist on social media (see below) to stay apprised. We are an anti-email media outlet, and as such will only be releasing our reports/ updates/ news through Twitter and Facebook as well as newswire.
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This report/release/profile is a commercial advertisement and is for general information purposes only. We are engaged in the business of marketing and advertising companies for monetary compensation unless otherwise stated below. The Wealthy Biotech Trader and its employees are not a Registered Investment Advisors, Broker Dealers or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Sometimes human error can attribute to honest mistakes in reporting on issues regarding public companies and overall capital markets, and as such we are not responsible for the complete accuracy in these reports as the reader is required to verify all statements to ensure they are completely accurate. The Wealthy Biotech Trader encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled through their website, news releases, and corporate filings, or is available from public sources and The Wealthy Biotech Trader makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. The Wealthy Biotech Trader’s parent company has been and will be compensated roughly $25,000 per month by PositiveID. The Wealthy Biotech Trader’s controlling parent company has also been compensated $62,500 by PositiveID in the form of a convertible note and readers should understand that they will convert this note into common shares sell them into the market as soon as the statutory 144 hold period has lapsed. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions “may”, “could”, or “might” occur. Understand there is no guarantee past performance will be indicative of future results. Past Performance is based on the security’s previous day closing price and the high of day price during our promotional coverage. Readers must visit our website at www.wealthyventurecapitalist.com in order to view our entire disclaimer which covers most of the risks, biases and liability releases to have a full understanding after reading this article.