The biotechnology and pharma sector has been one of the most stable segments in the stock market for the last few years. The growth of this industry can be seen from the fact that the Nasdaq Biotechnology Index and S&P 500 Biotechnology Index grew by a whopping 36.9% and 43.6% respectively in 2014. The following chart shows the comparison of these indices with the Dow Jones Industrial Average (6.1%).
Though there were many pharmaceutical giants that grew manifold over the years, when it comes to buying options, certain stocks have clearly stood out from the rest. Their share prices are quite low, but the increase in prices has been more than 100%, bringing absolute delight to investors. Ernie Tremblay, a highly respected medical writer, researcher and biotechnology portfolio analysis specialist, puts his bet on the following three stocks to buy for 2015.
Organovo Holdings
If you are looking for a stock price that is under $10 and whose share prices have increased by 307% in the last five years, it is Organovo Holdings (ONVO, Financial). The share price of the company is just around $6.32 currently, making it an attractive buy for investors. So what has triggered the massive growth of Organovo over the years? The answer is simple – “personalised medicine”. Organovo develops personalised medicines for diseases like multiple sclerosis, cancer and the like. These medicines can be adjusted and used by different people based on their body conditions. In addition to this, Organovo also specialises in providing medications for chronic problems like neck pain, back pain, bone repairs and replacement of organs. Tremblay believes that Organovo has unlimited potential that is untapped in the clinical research segment and recommends this as a “Strong buy” due its long term potential.
Keryx Biopharmaceuticals
Keryx Biopharmaceuticals (KERX, Financial) is one of the best long term investment biotechnology stocks to buy, according to Tremblay. The share price growth of Keryx from August 2012 to December 2014 explains why it is figuring in the top 3 biotechnology stocks for 2015. From a share price of just around $2.06 during August 2012, Keryx’s share prices had climbed up to $14.37 during December 2014. In just a couple of years, share prices had climbed up to 598%, which is extremely positive for its investors. One of the key factors of success of Keryx has been its drugs to treat renal diseases. Currently, it is waiting for approval for its ferric citrate drug, which will bring down the blood phosphate content in patients on dialysis. Once approval is received, this drug would boost up the share prices of Keryx to a great extent.
During September 2014, the share prices slumped quite low because there was incorrect information about this drug floating in the market. It was reported that this drug could lower the iron levels in one’s blood. However, Keryx proved that this information was wrong and emerged successful in the market. Nevertheless, share prices have not gone up to the pre-September period ($18) and are currently trading in the market at around $12 per share, which is the discounted rate. According to Tremblay, this is the perfect moment to buy this share and hold it for a long term. The following is the trend of share prices of Keryx for the last year.
Gilead Sciences Inc.
For those of you who may not know Gilead Sciences (GILD, Financial) by its name, it is the manufacturer of the reputed drug, “Sovaldi”. Sovaldi is one of the most effective treatments of Hepatitis C. The only downside to this drug is its cost. A full package of treatment using Sovaldi costs around $84,000 per person. However, many people are using this, because it is currently one of the most successful drugs to have ever been introduced in the medical world. Currently Gilead is all set to get approval from the FDA on yet another drug to treat Hepatitis C, known as Harvoni. This is a stronger, more effective and more expensive drug than Sovaldi. Once it is approved, it will ensure that it brings in more success for Gilead than Sovaldi.
Currently, the share price of Gilead is $106 per share. It does look costly; however Tremblay recommends investors to buy this at the earliest as the share prices are currently trading at a discount. During 2014, share prices saw an impressive 41% increase overall. Only during November, prices slumped by 10% due to reduced EPS figures. Tremblay believes that the increase rate of revenues for 2014 could go up to 305% when the last quarter results are announced by Gilead. With revenues expected to increase to 115% next year, Gilead is one of the strongest stocks in the biotechnology segment for 2015. The following chart represents the share price trend of Gilead over the last year.
Â
