Biotech companies are in the eye of the storm as the world slowly starts to recover from the global pandemic. Government institutions and professional traders are banking on biotech stocks to develop a vaccine to eradicate COVID-19 at the earliest.
Tilt your stock portfolio toward biotech companies now and you could stand to make substantial profits in the near future.
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You can also find cost-effective stocks under $20 to trade daily on the stock exchange.
Overview: Biotech Stocks
Biotech companies are a subsector of healthcare stocks that primarily focus on developing new drugs and treatments for medical conditions, diseases and viruses. The stock value and growth potential of a biotech firm depend on the type of diseases it treats.
For instance, a biotech firm working on breast cancer treatments, which has an estimated number of 279,100 new cases in the U.S. might be more valuable than a company that is developing drugs for Ogilvie’s Syndrome, a rare disease that only affects 1%–3% of the U.S. population.
Every new drug developed by biotech firms has to be submitted to the Food and Drug Association (FDA) for approval. Medical companies spend years developing a new drug but may fail to get it approved by the FDA. Some of these drugs will never hit the shelf of pharmaceuticals even after countless clinical trials. On the other hand, if a biotech company gets a new drug sanctioned by the FDA and the demand is high, the stock value can double or even triple overnight.
Best Online Brokers for Biotech Stock
An online broker can help you trade biotech stocks with speed and precision.
You can gain access to professional-level trading tools such as stock screens by opening an account on these platforms. Online brokers let you apply custom filters such as setting a price range to narrow down stocks under $10 within minutes.
Explore these online brokers to get started today.
Commissions
$0
Account Minimum
$0
1 Minute Review
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
Best For
- Active traders
- Intermediate traders
- Advanced traders
Pros
- Commission-free trading in over 5,000 different stocks and ETFs
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Leverage of 4:1 on margin trades made the same day and leverage of 2:1 on trades held overnight
- Intuitive trading platform with technical and fundamental analysis tools
Cons
- Does not support trading in options, mutual funds, bonds or OTC stocks
Commissions
$0
Account Minimum
$0
1 Minute Review
TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.
Best For
- Advanced traders
- Options and futures traders
- Active stock traders
Pros
- Comprehensive trading platform and professional-grade tools
- Wide range of tradable securities
- Fully-operational mobile app
Cons
- Confusing pricing structure to leave new traders with a weak understanding of what they pay
- Cluttered layout to make navigating TradeStation’s platform more difficult than it should be
Commissions
$0
$6.95 for OTC Stocks
Account Minimum
$0
1 Minute Review
This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.
Best For
- Novice investors
- Retirement savers
- Day traders
Pros
- World-class trading platforms
- Detailed research reports and Education Center
- Assets ranging from stocks and ETFs to derivatives like futures and options
Cons
- Thinkorswim can be overwhelming to inexperienced traders
- Derivatives trading more costly than some competitors
- Expensive margin rates
Features to Look for in Biotech Stock
- Earnings per share: You can determine the profitability of a company by its earnings per share (EPS). It is calculated by dividing the net income of the company by the total number of its outstanding shares.
- Price-earnings ratio: The price-earnings ratio (P/E ratio) is calculated by dividing the current stock price by its EPS. Based on the P/E ratio, you can assess if a stock is undervalued or overvalued. The lower the P/E ratio of the stock, the better an investment it is. Generally, penny stocks under $5 have the lowest P/E ratios.
- Medical innovation: Biotech firms can spend years conducting clinical trials to test a new drug. Keep a constant watch on any news regarding medical breakthroughs and FDA approvals to make the most of your trade.
Be Patient for Better Profits
Advanced medical technology has led to longer and more fulfilling lives. An investment in biotech stocks involves longer buy-and-hold periods, but if you are patient with your trades, you can strike gold when you least expect it.
