I Don't Trust the Rally. I Do Trust These 2 Stocks on My Shopping List

Biotech

Investors finally saw a rebound in equities during the holiday-shortened trading week in front of the holiday weekend. This was after five-straight weeks of declines in the S&P 500. Last Tuesday was one of the best days for investors since 2022.

I don’t feel, however, that this rally has legs. I chalked up last week to a combination of short-term oversold conditions, resulting in exhausted sellers as well as some aggressive short positioning, and algorithmic covering.

Importantly, nothing has been resolved around the conflict in the Middle East and the situation in private credit is rapidly deteriorating as well. The POTUS has threatened to hit Iranian infrastructure and power plants early this week if some deal is not reached. This could escalate the retaliation on key assets and facilities across the gulf region by Iran, including refineries, pipelines, desalination plants as well as LNG and other energy facilities. My view is the administration has approximately a month to get the Strait of Hormuz open, or this will be severe ramifications to the global economy and the equity markets.

Given this view, my trading has been and will remain defensive. I have largely stuck to building some positions in blue chip names over the past few weeks that have fallen significantly from recent highs. I have used covered-call orders to establish these initial holdings in names like AbbVie (ABBV) , The Walt Disney Company (DIS) , and Salesforce, Inc. (CRM) . Each weekend I built a list of names I would add to my stakes in or establish new holdings within if stocks saw an additional pullback.

This column will highlight two potential items on my shopping list for this week. Both are nicely profitable mid-cap biopharma names. We will start with BioMarin Pharmaceuticals (BMRN) , which has a market cap just north of $10 billion. This rare disease therapeutics concern has several products on the market. The company saw overall sales growth of 13% in fiscal 2025 to just over $3.2 billion.

BioMarin acquired Amicus Therapeutics late last year. The acquisition should be completed sometime this quarter. The purchase brought two new Food and Drug Administration-approved products for rare diseases to BioMarin’s portfolio and one key pipeline asset. This should boost revenue growth at BioMarin into the high teens annually over the next few years. Earnings should grow faster. The stock is undervalued at under 11-times forward earnings.

I have a fairly large existing covered-call holding in Lantheus Holdings (LNTH) . Most of that position in this radiopharmaceutical company, however, will expire in the money on April 16. The stock has a market capitalization of just south of $5 billion. Sales and earnings growth will be negative in fiscal 2026. But that is due to a recent strategic divesture management made to better focus on its innovative Positron Emission Tomography or PET diagnostic imaging core business. Growth will return in fiscal 2027 and beyond. The company has a solid balance sheet and bought back $100 million of its own stock in the most recently completed quarter. BioMarin has $200 million left on an existing stock repurchase authorization as well. The company is advancing a promising pipeline and the stock trades for just over 12-times fiscal 2027 expected earnings per share. I will be looking for any pullback to closer to $70 a share to start to re-establish the position that will be called from me in less than two weeks.

At the time of publication, Jensen was long ABBV, BMRN, CRM, DIS and LNTH