Why I’m bullish on the biotech sector

My aim in managing the Opportunistic and Adventurous portfolio is to look for companies that are potentially game-changers.

Right now, I’m holding a relatively small position in Neuralstem (CUR). Stem cell treatments have the potential for revolutionizing medicine as we know it.

CUR Chart

CUR data by YCharts

In my opinion, possible applications are practically endless, but work being done by this company on Amyotrophic lateral sclerosis (ALS), often referred to as Lou Gehrig’s Disease, and spinal cord injuries is looking promising. Neuralstem is, in my view, the best company in this area.

When it comes to game-changing phenomena, the ongoing legalization of marijuana can hardly be ignored. Right now there’s an awful lot of money chasing relatively few investment opportunities.

That’s led to some spectacular price volatility of all kinds of marijuana stocks, some of which have relatively small capitalization. Other companies are nothing but smoke and mirrors.

I’m spending a great deal of time trying to separate the wheat from the chaff, so to speak. Things can move very quickly, so I monitor these holdings such as Terra Tech Corp. (TRTC) on an hourly basis.

I have a fairly large holding in iShares Nasdaq Biotechnology (IBB), which is essentially an ETF for the biotech sector. It can be difficult to pick the winners in this highly technical area of the market, where there is a lot of insider information.

IBB Chart

IBB data by YCharts

Biotech is finally beginning to have solid applications beyond the area of research. In my opinion, the entire sector may outperform the market as a whole.

Illumina (ILMN) is the preeminent company manufacturing gene-sequencing equipment. So long as they’re leading the pack, I intend to stick with them, while keeping a sharp eye on possible emerging competitors in China.

DISCLAIMER: The investments discussed are held in client accounts as of January 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Investments in securities of small-cap and growth companies may be especially volatile.  Past performance is no guarantee of future results.

  • http://www.raybiotech.com/ RayBioTech

    it would be a bold investor indeed who didn’t wonder whether it’s time to take the money and run.