Why Every Single Stock in the Biotech Sector Could Go Up

biotech

Cryptocurrencies aren’t the only place you can invest to make life-altering gains.

Though they are clearly the hot topic right now.

And as you know I’m very bullish on the long-term prospects of a number of cryptocurrencies. The ones with unique features that make them — in my opinion — unstoppable.

But before cryptos came along there was another burgeoning market. One that offered the huge gains that cryptos do today.

And it still does…

It’s not getting much airplay at the moment. Which is actually a good thing. It means you don’t pay a ‘hype premium.’

Hated or ignored sectors are often the most profitable places to look, if you’re a canny investor…

And the opportunities here are aplenty…

In a twist of fate, I think you could see a resurgent boom in this sector very soon. Thanks in part to cryptocurrencies. Or more accurately, I should say, thanks to blockchain technology.

There’s a compelling opportunity for growth here at the moment. If you can handle the risk that comes with it of course.

Let me explain…

The forgotten tech industry

You’ll have heard of the biotech sector.

Biotech companies are mainly involved in developing new drug treatments, tests and other medical technologies.

The sector is notoriously volatile. Mainly because investors are often banking on a firm’s latest drug or treatment receiving regulatory approval.  And the chances of success are usually pretty low.

Individual companies can, and do, go bust. Or suffer huge share price falls. And the sector is heavily sensitive to the actions of regulators.

It’s certainly not a place to have your entire nest egg sitting.

But when a company gets it right it can move sharply higher, very quickly.

In the last week, Nektar Therapuetics [NASDAQ:NKTR], Valeant Pharmaceuticals [NYSE:VRX] and Sage Therapuetics [NASDAQ:SAGE] all rose over 35% on potential breakthrough news.

And as a whole, the biotech market is going well.

Check out the chart:

NASDAQ BIOTECH - S&P 500 Healthcare Index Performance 12/31/12 - 6/22/17 14-11-17

Source: NASDAQ

[Click to open new window]

The winners are more than compensating for the losers in aggregate.

While all the talk is on stocks like Facebook [NASDAQ:FB] and Apple [NASDAQ:AAPL], the less discussed biotech sector is still a quiet achiever.

Though in the last month it’s retraced, falling around 8%.

This is a sharp fall compared to many other sectors (apart from cryptocurrencies where that’s just a rounding error!).

In the short-term, it has entered oversold territory. That kind of indicator spells opportunity.

Unless it’s the start of a trend reversal, you should expect to see some rebound buying come in soon. A chance for traders to make some quick profits. Or a chance for long-term investors to get in at lower prices.

And beyond the short term, I think the long-term prospects look increasingly bright here.

In fact, longer-term I think we could see a complete revaluation of this entire industry.

A unique situation where nearly every stock in this sector goes up in value.

This theory is based on — you guessed it — blockchain technology.

You see, we’re in the midst of a data revolution right now… 

Blockchains are piping for big data

I’ve talked a bit about this topic before.

But I’ll recap a bit now.

Cryptocurrencies like bitcoin and ethereum are just one part of the revolution.

At its heart, this is a data revolution. And the blockchain technology that underpins cryptocurrencies is the key to unlocking the power of big data.

It will allow important information to be shared, traded, transferred and used in ways that weren’t possible before.

All in the blink of an eye.

At the same time, machine learning and artificial intelligence are dramatically increasing our capability of making sense of it all.

This is starting to play out already.

But where does biotech come in to all of this?

It’s all about data.

Biotechnology relies on data to conduct research. It’s the key ingredient in the validation process.

From Nature Magazine:

‘Biologists are joining the big-data club. With the advent of high-throughput genomics, life scientists are starting to grapple with massive data sets, encountering challenges with handling, processing and moving information that were once the domain of astronomers and high-energy physicists.

‘Harnessing powerful computers and numerous tools for data analysis is crucial in drug discovery and other areas of big-data biology. But that is only part of the problem. Data and tools need to be more than close — they must talk to one another.’

Big data is not new. But what is new is the addition of blockchain to big data.

You see, blockchain technology provides that ability for data to move and to ‘talk’, while at the same time retaining crucial security and privacy features.

The coming biotech boom

It’s an intersection of big data, blockchain and biotech. And if it plays out as I think it will, biotech valuations will surge big time.

Think about it…

Research times will get quicker.

Access to good data will get easier.

Researchers can publicly validate their results with more integrity.

And companies will be able to avoid costly patent disputes thanks to blockchain immutability.

Basically, the result will be lower costs and faster research lead times for the entire biotech industry.

That’s why I think we could see a revaluation of every biotech stock as this story plays out.

And why I think investors that understand this ongoing data revolution are set to reap huge rewards in the next few years.

Biotech is just one example.

But potentially a very profitable one.

Good Investing,

Ryan Dinse
Editor, Markets & Money

Ryan Dinse

Ryan Dinse

Ryan Dinse is an analyst at Markets and Money.

He has two decades of experience in financial planning, equity analysis and credit markets.

Ryan combines fundamental, technical and economic

Leave a Reply

Be the First to Comment!

Notify of
avatar
wpDiscuz
Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@marketsandmoney.com.au