Best Biotech Stocks Right Now

Chetan Shekar

Contributor, Benzinga

May 1, 2019 Updated: May 15, 2020

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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Highlighted Biotech Stocks:

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. 

TD Ameritrade

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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.

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• 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

TradeStation

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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

Webull

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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.   

Biotech Stocks to Watch Out for This Year

Looking for biotech stocks to diversify your portfolio? These companies may be worth investing in. 

1. Gilead Sciences Inc. (NASDAQ: GILD) 

With a combined strength of 12,000 employees, Gilead Sciences is a biotech firm that researches advanced treatments for life-threatening diseases. It has developed several drugs to fight AIDS, liver diseases, cancer, cardiovascular diseases and respiratory diseases.  

Investing in Gilead Sciences can earn you an annual dividend yield of 3.49%. It has an EPS of $3.89 and a P/E ratio of 19.73. The biotech stock has a market cap of $96 billion and has high liquidity with more than 24 million shares traded per day. It reported total revenue of $22.1 billion in 2019. 

Due to the ongoing global pandemic, the FDA has issued an emergency use authorization of Veklury® (remdesivir) for the treatment of COVID-19 in Japan. This approval is based on data from Gilead Science’s clinical trials. 

2. Vertex Pharmaceuticals (NASDAQ: VRTX) 

Founded in 1989, Vertex is a global biotechnology company that invests in scientific innovations to create transformative medicines for people with serious and life-threatening diseases. It has more than 12 ongoing research programs focused on the underlying mechanisms of cystic fibrosis and other serious diseases.

The company stock is valued at a market capitalization of $72 billion. It has high liquidity with over 2 million shares traded per day. Vertex has an EPS of $5.77 and a P/E ratio of 47.93. It generated total revenue of $4.1 million in 2019. 

Vertex made the news recently by announcing that the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) had a positive opinion of KALYDECO®. It is a treatment for children and adolescents with cystic fibrosis. If approved, KALYDECO will be the first and only medicine in Europe to treat cystic fibrosis in patients with the R117H mutation, the most common residual function mutation. 

3. Amgen Inc. (NASDAQ: AMGN)

An industry-leader in biotechnology, Amgen uses cutting-edge science to develop therapies for serious illnesses. It manufactures and distributes 12 FDA approved drugs to millions of patients in over 100 countries. 

With an EPS of $12.76 and a P/E ratio of 18.47, this biotech stock has a market cap of $138 billion. It reported total revenue of $23 million in 2019. Amgen offers an annual dividend yield of 2.7% per share. It has an average daily trade volume of 3.4 million shares.

Amgen has announced that the FDA has granted Fast Track designation for a drug being developed for the potential treatment of chronic heart failure. This status will allow the drug review process to be accelerated as results are expected by the 4th quarter of 2020.  

4. Regeneron Pharmaceuticals (NASDAQ: REGN)

For over 30 years, Regeneron has invented life-transforming medicines for people with serious diseases. It has 7 FDA-approved drugs designed to help patients with eye disease, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, infectious diseases, pain and other rare diseases. 

The company stock has high liquidity with over 1 million shares traded per day. It has an EPS of $19.90 and a P/E ratio of 28.61. Regeneron has a market cap of $64 billion and reported total revenue of $67 million in 2019. 

Recently, Regeneron reported promising data from clinical trials for a new drug, Libtayo. The trials showed therapeutic results in patients with advanced basal cell carcinoma. This medical condition currently has no approved treatments. 

5. Biogen Inc. (NASDAQ: BIIB)

As pioneers in neuroscience, Biogen led innovative scientific research to treat devastating neurological diseases. It manufactures and distributes 10 FDA-approved drugs to fight multiple sclerosis, spinal muscular atrophy and Alzheimer’s disease. 

Biogen has a market cap of $51 billion. It has an EPS of $32.40 and a P/E ratio of 9.69. The biotech firm reported total revenue of $14 billion in 2019. It has high liquidity with an average daily trade volume of 2 million shares. 

In April 2020, Biogen announced that it will continue investing in SPINRAZA. This drug is the first FDA-approved treatment for spinal muscular atrophy. 

Biggest Biotech Movers of the Day

Here’s the latest update on the biotech stocks with the biggest price movements on the stock exchange. 

Stay up to date with the biggest premarket movers before trading sessions open on the stock market. 

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. 

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