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The Next Sector Rotation Will Be To Biotechs

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The Next Sector Rotation Will Be To Biotechs

A sector rotation is common, particularly in times of market volatility. However, picking the timing and the right sector is always a concern for investors.

"There's always money coming out of something, going into something else," Joel Elconin, co-host of Benzinga's PreMarket Prep, said during Tuesday's daily show.

Dennis Dick, the show's co-host, jumped in and pointed that shares of Gilead Sciences, Inc. (NASDAQ: GILD) "got killed" following its earnings release, and Biogen Inc (NASDAQ: BIIB) has seen its shares "struggle for a while."

Related Link: Should Biotech Investors Take Hillary Clinton's Drug Pricing Plan Seriously?

Dick continued that there is a major overhang is the U.S. presidential election and delved into what affect a potential Clinton presidency would have on the entire drug sector, specifically regarding any new drug pricing policies.

"There is value here [in the biotech sector]," Dick said. "These companies make money."

As an example, Dick highlighted Pfizer Inc. (NYSE: PFE) as a standout as the company is expected to see $53 billion in revenue this year and offers a healthy dividend yield of 3.75 percent. Meanwhile, Gilead's stock boasts a P/E multiple of approximately 8 to 9.

Dick continued that investors who buy biotech stocks at current levels will be "happy" in five years from now. He did however caution there might be "short-term pain" given the U.S. election.

 

Related Articles (BIIB + GILD)

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