With biotech rallying, investors who really want some bang for their buck should consider three smaller (but more risky) stocks, each one featuring strong charts and low price tags.
The S&P Biotechnology Index bottomed at 929 on February 24, just three days after the S&P 500 peaked at 1344.03. Biotech then continued to move higher over the next few weeks as the overall market was declining.
Since the close on February 24, the biotech group is up 13.2% while the S&P 500 is just 3.1% higher.
Big biotech companies like $52 billion Amgen (AMGN) get the lion’s share of the attention from the press and investors when biotech sector moves. Though AMGN looks positive technically after Tuesday’s 2.8% gain, it is up just 10.3% from its March lows.
But the real bang for your buck—which is accompanied by much higher risk—is in the smaller biotechnology companies. For example, Spectrum Pharmaceuticals, Inc (SPPI) is just a $500 million company, one tenth the size of DNDN, and one hundredth the size of AMGN. From its March lows, SPPI is up 46.3%.
The three biotech companies under $7 I will look at today all have compelling technical patterns, but they are appropriate only for the most speculative part of your portfolio. In addition, one biotech giant I earlier recommended avoiding now looks attractive for new positions.
Chart Analysis: Oncolytics Biotech, Inc (ONCY) is a $400 million, Canada-based company that develops viruses as potential cancer therapeutics. It is the least liquid of the three stocks, trading around 150,000 shares daily. ONCY peaked early in the year at $6.95 and this week has dropped close to the 38.2% retracement support at $5.20.
Repros Therapeutics, Inc. (RPRX) is a very small ($70 million) developmental-stage biopharmaceutical company that concentrates on developing small molecular drugs for both male and female reproductive disorders. It trades 470,000 shares daily and is due to report earnings on May 9.
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