As I Hold These 17 Biotech Stocks, I'm Eyeing a Major Cycle Low in the Sector
Here is a list of the names I own and what I'm looking for.
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The market is off to a good start on Tuesday morning, as it awaits the next chapter in the tariff saga. There was nothing new this morning, but the willingness to adjust tariffs on consumer electronics, semiconductors, and automobiles is a relief, and the potential for the announcement of trade deals with various countries is likely to keep bears on the sidelines for now. Breadth is not as strong as on Monday, but it is running 2-to-1 positive, and the Russell 2000 is leading with a gain of more than 1%.
The main sector that is catching my eye is biotechnology IBB, which was up about 3% on Monday and is adding another 0.4% so far on Tuesday.
If you have read my columns over the years it should be no secret that I like to trade biotechnology stocks because of their high volatility and the potential for big moves on news flow. But it has been a very tough group for a long time. Over the past five years, the SPDR S&P Biotech ETF XBI, which tracks small- and mid-cap biotech stocks, has lost 14%, while the S&P 500 has gained 89%.
Even though the group has been so badly beaten up already, it went even lower recently on worries about Robert Kennedy becoming the new head of the Health and Human Services. In addition, the tariff uncertainty drove it even further with the broad market.
The one great certainty of the stock market is cycles, and I believe that the biotechnology cycle is now near a major low, and conditions are good for the group to finally start to gain attention from investors that are looking for bargains.
It is unlikely to be a smooth transition, but the trading action on Monday was a definite shift. For the most part, the biotechnology group has little exposure to tariffs. There are some issues with chemical supplies from China, but manufacturing of newly developed drugs is done in places like Ireland and Puerto Rico, rather than China.
The Trump Administration has indicated that it is a matter of national security to have a robust drug development industry in the U.S., and there are likely to be incentives for the industry in the future.
I’ll have more details on individual stocks that I believe will benefit from a positive biotechnology cycle. Yesterday, I discussed BridgeBio BBIO. Other names I currently own are Xeris XERS, ADMA Biologics ADMA, Clearpoint Neuro CLPT, Delcath Systems DCTH, Emergent Biosolutions EBS, Humacyte HUMA, Mereo MREO, Ocular OCUL, Uniqure QURE, Ultragenyx RARE, Rocket Pharmaceuticals RCKT, Sangamo SGMO, Sprinworks SWTX, TG Therapeutics TGTX, Viking VKTX and Vyne Therapeutics VYNE.
I’ll be discussing them in future columns.
At the time of publication, DePorre was long BBIO, XERS, ADMA, CLPT, DCTH, EBS, HUMA, MREO, OCUL, QURE, RARE, RCKT, SGMO, SWTX, TGTX, VKTX, VYNE.
